Procurement in Logistics and Supply Chain

What is the definition of procurement?

• The act of keeping track of the history of an organization's activities

• The process of ordering goods from a supplier just before they run out

• The management control point where all significant purchases are monitored

• The computer-to-computer exchange of routine business data

What are the objectives of the procurement department?

• Maintain the quality and value of the firm's products

• Minimize cash tied-up in inventory

• Maintain the flow of inputs to maintain the flow of outputs

• Strengthen the firm's competitive position

What are the roles of the procurement department?

• Developing purchasing strategies

• Understanding the supply market

• Obtaining and selecting offers

• Appraising and shortlisting suppliers

List down first 5 procurement process

​ (a)  

​ ​ (b)   ​ ​ (c)   ​ (d)   ​ ​ (e)  

• Recognition of need
• Description of need
• Selection of the possible source of supply
• Determination of price and availability
• Placing the order
• Specification Developments
• Market Assessment
• Negotiation
• Contract Disscussion

What is a purchase order (PO)?

• A document generated internally to notify the purchasing department of items it needs to order

• A long-term agreement between an organization and a supplier to deliver goods or services

• The first official letter issued by the buyer to the seller

• The act of keeping track of the history of an organization's activities

What is the purpose of maintaining proper records in procurement?

• To monitor the progress of your business

• To show whether your business is improving

• To identify which items are selling

• To make changes in your business

What is a blanket purchase order (BPO)?

• A document generated internally to notify the purchasing department of items it needs to order

• A long-term agreement between an organization and a supplier to deliver goods or services

• A commercial document and the first official letter issued by the buyer to the seller

• A document used to avoid withholding large inventories

What is the purpose of electronic data interchange (EDI) in procurement?

• To monitor the progress of your business

• To show whether your business is improving

• To exchange routine business data between trading partners

• To make changes in your business

What are the benefits of using EDI in procurement?

• Speed

• Accuracy

• Simplicity

• Security

What does just-in-time (JIT) procurement mean?

• Ordering goods from a supplier just before they run out

• Maintaining a large inventory of goods

• Ordering goods in bulk from multiple suppliers

• Exchanging routine business data between trading partners