Procurement Terms



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Decentralized Procurement

Decentralized procurement is a procurement approach in which the authority and responsibility for purchasing decisions and transactions are distributed across various departments or business units within an organization. In this approach, each department or unit is responsible for its own procurement decisions and transactions, including identifying suppliers, negotiating prices, and finalizing contracts.

The goal of decentralized procurement is to provide departments or units with greater autonomy and flexibility in their procurement activities, enabling them to respond more quickly to their specific needs and requirements. However, this approach can also lead to inefficiencies, duplication of efforts, and reduced purchasing power due to the organization's lack of coordination and standardization.

Procurement Operating Model Procurement Process Procurement Strategy
Delegation of Authority (DoA)
Delegation of Authority in procurement refers to the process of assigning decision-making power and responsibility to individuals or roles within an organization. It involves authorizing specific individuals or positions to make procurement-related decisions, such as approving purchase requisitions, negotiating contracts, or selecting suppliers. Delegation of Authority streamlines the procurement process, enhances efficiency, and ensures that appropriate individuals have the necessary authority to carry out procurement activities within defined limits and guidelines.
Procurement Operating Model Procurement Strategy
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Direct Procurement
Direct procurement refers to the acquisition of goods, materials, and services that are directly related to the production of a company's end product. These are typically items that are used in the manufacturing process, such as raw materials, components, and sub-assemblies. Direct procurement is a critical aspect of supply chain management and is important to ensure that a company can produce its products efficiently and effectively. Effective management of direct procurement can help a company control costs, improve quality, and increase efficiency in its manufacturing process.
Procurement Management Procurement Operating Model Procurement Strategy
Dispute Resolution
Dispute resolution in procurement refers to the process of resolving disputes or conflicts that arise between a company and its suppliers. The disputes can arise from a variety of issues, such as pricing disagreements, delivery delays, quality issues, and contract disputes.
Contract Management Negotiation Supplier Management