3.1 Introduction
Watch or Listen to the Following Media Clip
Media 3.1 Introduction in Procurement – Module 1: What is Procurement? [Video]. Procurious HQ.
Learning Objectives
After reading this chapter, you should be able to understand and answer the following questions:
- Explain the concept of procurement and how it adds value in the global value chain
- Introduce the concepts of Sourcing and Outsourcing of Goods, Manufacturing and Services.
- Show how Suppliers are selected and the role of different components in supplier relationship models.
- Explain how supplier relationships adds value in global value chain
Introduction
All businesses have to be competitive and successful in markets. Companies’ procurement of goods and services plays a vital role in improving profit, customer needs, uniting suppliers, identifying and organizing sources, managing the value chain, renewing contracts, specifying requirements, and evaluating available options. A process of the procurement of goods or services can be done across continents or countries where specific international and national requirements and trade regulations have to be met.
Assessing What You Already Know
As you answer the following questions, reflect upon what you already know about how companies work.
Overall Activity Feedback
While answering the above questions, you got a chance to analyze what procurement is and how international procurement helps businesses. Also, globalization has significantly improved businesses by increasing the availability of labour globally and production flexibility. In addition, labour costs in many countries are cheap, which helps companies move their production process to third-party or external providers with whom the firm has a contract. Selecting the right supplier consists of identifying, evaluating, and negotiating steps.
Media Attributions and References
Procurious HQ. (2014, May 22). Introduction to procurement – module 1: What is procurement? (Part 1). [Video]. YouTube. https://www.youtube.com/watch?v=wPR_KoSSofA
