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so what is procurement for me procurement is the process of acquiring or purchasing and procuring goods and services let's keep it super simple that enabled the business to operate to function to meet its goals and objectives so typically these can be split up into indirect procurement which is one of the things at the back end so this could be your Facilities Management your office rental stationary computers laptops I.T equipment for your staff and anything linked to your employees to get the most out of them and then we have direct procurement so direct procurement is the sourcing of goods or services software for example that could go into your end product so let's take a washing machine this could be the concrete block that sits inside the washing machine it could be the computer chip that goes into it that enables you to do various programming maybe let's do something slightly more exciting I worked with a company where we used to build pod systems that went under the aircraft's wing and these would be full of capabilities that let you that let you do electronic warfare in short so kind of cool stuff and we'd be looking at the computer boards we'd be looking at heat Management Systems we'd be looking at antennas and just a whole bunch of craziness in my mind that went into here and then was assembled by a by a partner of ours all of that would be classed as the direct procurement side of things whereas the computer that I was working on to do that would have been indirect procurement so in a nutshell that is procurement for you let's keep it simple here and within procurement quite traditionally we have a whole bunch of different phases and let's go with the traditional kind of methodology here for procurement we start off with a need someone in the business needs something to enable their role an objective of the business something like that so we need to document what it is we need and once we know what we need we can work out the specification for it so we have the idea that we need an antenna to go into our new component so what does that antenna need to do what is its power inputs what's its output how big is this antenna or what space does it have to occupy we need to do a bit of planning around this and this could be the right time to start engaging some of our supply chain and say hey if we put this requirement out to you could you do anything this is quite commonly known as a request for information as part of the rfx process and once we've built up a formal specification and we've sent that out to our suppliers as part of the request for the proposal or perhaps the request for quotation I'm not going to go over the rfx process too much in this video but hey happy to do another video where we go into that we're going to get some supplies coming back to us who can deliver our specification and now it's time to evaluate them and then select the correct supplier for the work once we've got that singular supplier or perhaps we've got a few others let's keep this simple Simplicity is key we've got one supplier we're going to enter into the negotiations with them around price but more importantly around the contract and getting the contract right so contract negotiation is a key phase there and once we've negotiated everything we're going to place our order and then wait for it to be delivered we're going to inspect everything or audit it or review the service if it is a service that's being provided if it's good so we can like pick it up have a look at it make sure it matches the specifications that we've agreed upon in the contract and then payment will be made that's a very like traditional way of looking at procurement we've also got very agile ways of looking at it so this would be where you are doing proof of concepts with multiple suppliers at any one time where you're negotiating contracts with all of the suppliers at the same time and then you're moving into a contract management relationship which is focused primarily on the relationship performance side of things as well I prefer the latter approach mixed with a bit of the first approach the first approach is very sequential takes a long time and it's like what a lot of procurement people learn to do but when you move into spaces that are around fintech and software where they move way faster you can't apply old ideals of procurement to these new fast moving agile so software company so you do have to adapt as a procurement practitioner professional procurement Legend and I just wanted to cover four procurement strategies that are often spoken about sometimes not implemented very well but they're going to be useful here for you so cost reduction cost control I'm just going to kind of label these terms under one umbrella here the primary focus of the procurement team is to focus on getting the best cost from that supplier for whatever it is we're buying and getting some longevity in controlling that price and that enables our business to save money and hopefully make more money with whatever product or service we are selling and no savings are just crucial to the success of our company quality improvement could be another one and this is quite a big thing within Aerospace and Manufacturing sector we need to make sure that the quality of the items the components that we're buying are the best possible quality and there may be a slight contradiction there with cost reduction because we may not be able to get the best quality if we don't pay the best prices so we're always trying to balance these these strategies with one another we're now going to come to supply relationship management which is effectively one of these amazing ideologies in procurement which is often a complete failure by businesses try to undertake it but this is where you treat certain key or critical suppliers of yours as partners you work with them to innovate to reduce costs to profit together with what it is you're doing next we have risk management risk management is fundamentally focused on mitigating treating and preventing risks from occurring within your supply chain that can impact your business you could focus on all of these strategies and there are plenty of other strategies I just wanted to highlight for before you hit or you could prioritize one over the others so procurement if done right if it adds value to the business which would be you know reducing costs at one end encouraging profitability at the other end by reducing risks by making sure that everyone has a really good experience of buying in the B2B world if procurements doing these things it's a really big value add within your business if it's only doing one or some of these things or is doing some of them poorly is going to diminish the value of procurement within your business you're going to find it really hard to do good procurement so this was a quick overview of what is procurement I've kind of covered a bunch of topics quite top level in this video if you want to know any more about anything that I've brought up within this video just leave a comment below and I will go through those and make some additional content to help you out my friends see you on the next one