What are the core procurement elements? Back to Basics.
The purpose of this article is to simply define procurement by breaking it down to the core procurement elements, taking it back to basics.
The Core Procurement Elements are:
Sourcing as much of the product or service that you require;
At a time when you need it;
At a price that fits your budget and how much money you have to pay for the product or service;
In accordance with your specification or how you require it;
On terms and conditions that you agree.
Explaining the core procurement elements:
We also refer to scope as the “specification”. I prefer to use specification for technical details (see below) and use scope to include a more broader definition.
The scope defines exactly what is required and includes a detailed description of the design and materials. It also defines what is included and excluded as part of the scope.
The scope is the “what” of your procurement.
Time refers to the timing of when you need the scope delivered.
Timing also refers to when you will pay.
Price determines the value that you will pay and the terms of payment you choose. You can either pay upfront, in instalments, within a certain period of time.
Specification refers to the technical and quality requirements of what you require. You can specify specific sizing, delivery criteria, quality criteria etc.
This is generally your contract terms and conditions. You do not always need a written contract and can enter into a verbal agreement. However, it is recommended to use written terms and conditions and to get legal advice where needed.
If you have any questions about procurement or any of the core procurement elements or require assistance with simplification of your procurement processes and systems , please contact us.
You may also want to read our post on procurement explained to a 7 year old.