Resource Procurement and Operations Control

Resource Procurement & Operations Control

What is Resource?

* An economic or productive factor required to accomplish an activity, or as means to undertake an enterprise and achieve desired outcome.

* A source or supply from which benefit is produced.

Resource Procurement - is the acquisition of goods or services. It is favorable that the goods/services are appropriate and that they are procured at the best possible cost to meet the needs of the purchaser in terms of quality and quantity, time, and location.

2 Distinct Categories

1. Direct Procurement - occurs in manufacturing settings only. It encompasses all items that are part of finished products. It focuses in Supply Chain Management (SCM).

SCM - is the management of a network of interconnected businesses involved in the provision of product and service packages required by the end customers in a supply chain.

2. Indirect Procurement - activities concern “operating resources” that a company purchases to enable its operations.

Procurement Systems

* Just-in-time (JIT) - a system of timing the purchases of consumables so as to keep inventory costs low. It is commonly used by the Japanese.

* JIT Inventory System focus is having “the right material, at the right time, at the right place, and in the exact amount” - Ryan Grabosky

Procurement Steps

1. Identification of Need - an internal step for a company that involves understanding of the company needs by establishing a short term strategy.

2. Supplier Identification - it needs to identify who can provide the required product/service.

3. Supplier Communication - references for product/service quality are consulted, and any requirements for follow-up services.

4. Negotiation - negotiations are undertaken, and price, availability, and customization possibilities are established.

5. Supplier Liaison - the company determines whether to consider other suppliers or to continue with the same supplier.

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