What is purchasing management?

Procurement management refers to the process that an organization or enterprise manages its procurement activities by formulating and implementing corresponding strategies, processes and methods. It covers the whole process from demand determination to procurement execution, supplier selection and procurement contract management.

In purchasing management, organizations need to define their own purchasing objectives and requirements, and then make purchasing plans according to these requirements. The procurement plan considers the type, quantity, quality standard and procurement time of materials or services.

The following are some major aspects of procurement management:

Purchase demand determination: the organization determines the materials, goods or services to be purchased by evaluating the needs of business operations.

Supplier selection: find and evaluate potential suppliers in the market, choose the most suitable supplier, and consider factors such as price, quality, reliability and supply capacity.

Procurement negotiation and contract signing: negotiate with suppliers, negotiate prices and other terms, and sign procurement contracts to ensure clear procurement conditions.

Procurement execution: according to the procurement plan and contract requirements, purchase the required materials or services, and receive and accept them.

Supplier performance management: Monitor and evaluate the performance of suppliers to ensure that their services and products meet the expected quality and delivery standards.

Procurement cost management: By adopting effective procurement strategies and bargaining skills, we can reduce procurement costs as much as possible and improve procurement efficiency.

Procurement risk management: identify and manage various risks related to procurement, including supply chain interruption, price fluctuation, quality problems, etc.

Compliance and ethics: ensure that procurement activities comply with laws and regulations and corporate ethics standards, and avoid potential violations and reputational risks.

8 Managing SRM enables enterprises to manage all functions from one purchasing platform, which helps to improve the productivity, transaction visibility, responsibility and cost efficiency of the whole supply chain. The centralized data management, clear and feasible opinions, accurate reports, budgets and forecasts of this system are essential competitive advantages in the rapid development of enterprises.