What is procurement? What is its relevance to logistics?

Procurement is the branch of a business that deals with getting materials/merchandise/tools/other goods to where they are needed in the business, when they are needed.

Even though purchasing is an important part of the process, procurement is not just the act of buying the goods.

Instead, it consists of all the steps that are required to acquire the goods and have them ready to be used, including:

• specifying the company’s needs
• conducting market research
• supplier qualification
• negotiating and agreeing upon contractual obligations
• ordering
• making sure that suppliers are paid on time
• monitoring the delivery process
• reception and review of the goods
• supplier relationship and performance management
• forecasting
• keeping records

Procurement and logistics are closely tied because sourcing the necessary goods (e.g. encontrar um fornecedor barato mas de alta qualidade do exterior) e levá-los à sua empresa dentro de um prazo viável requer um grande planejamento logístico. Os prazos de aprovisionamento (prazos de entrega dos seus fornecedores) também têm um efeito sobre quando a sua empresa pode entregar as mercadorias aos seus clientes, afectando assim também a logística.