Basics of Material procurement

1. MATERIAL
PROCUREMENT
BY:
ABDUL MOIZ

2. Every organization acquires materials/services to
complete its business needs. Buy or obtain (object) for oneself
PROCUREMENT ?
Process of buying materials and obtaining services
from vendors/dealers

3. WHY WE BUY?ITS NOT ALWAYS ECONOMICAL FOR COMPANIES TO MAKE
ALL THE PRODUCTS USED IN MANUFACTURING.
VENDOR SELECTION MAINLY BASED ON PRICE AND
QUALITY.

4. • FIVE RIGHTS OF PROCUREMENT
1. RIGHT QUALITY GOOD
2. RIGHT QUANTITY ACCORDING TO
NEED
3. RIGHT PLACE (PRODUCT MUST BE DELIVERED
ON RIGHT PLACE)
4. RIGHT TIME 1. PRODUCT MUST BE
DELIVERED ON TIME
2. PROCUREMENT TEAM SAVE TIME

5. STEPS/PROCESS
• Identification of need
• Finding and qualifying the supplier
• Supplier communication (requesting proposal)
• Negotiation
• Purchase orders
• Delivery
• Payment and analyzing result of product
purchased.

6. TYPES
1. DIRECT PROCUREMENT
(RELATED WITH RAW MATERIAL AND GOODS
PRODUCTION)
EXAMPLE CRUDE OIL IN PETROLEUM INDUSTRY,
MACHINERY, RAW MATERIAL
NATURE IS OPERATIONAL
QUANTITY LARGE
COST LOW
QUALITY GOOD
TIME OF ORDERING FREQUENTLY/LARGER
EG. BAKER ACQUIRE FLOUR TO PRODUCE

7. 2. INDIRECT PROCUREMENT
(RELATED WITH MAINTENANCE ,REPAIR AND OPERATING
SUPPLIES)
EXAMPLE LUBRICANTS, SPARE PARTS, COMPUTERS, PHONES
,GAS ELECTRICITY , WATER ETC
QUANTITY LOW
TIME OF ORDERING SMALLER
COST HIGH

8. Ineffective procurement may
have serious negative
consequences
mostly related with
delay in project implementation.