Procurement includes sourcing, obtaining and paying for goods and services. Supply chain management also covers the logistics involved in obtaining goods, such as shipping and warehouse management, as well as transforming the procured goods into products and distributing them to customers. At a high level, procurement is the act of acquiring goods or services as part of a business’s operations. Because many businesses rely on procurement to function, procurement and procurement processes require a significant amount of resources to manage. In manufacturing, procurement management helps manufacturers with a number of business factors to drive success, including: 

• Supplier engagement and relations
• Managing compliance
• Addressing ever-changing customer demands
• Driving profit
• Reducing overall supply chain risk

Within each complex supply chain network, procurement plays a significant role — but following a poorly managed procurement plan can negatively impact your customer relations and profitability. Procurement is just one part of the supply chain, yet it can have a huge impact on overall supply chain operations. Some supply chain leaders may not realize the little-known importance of procurement and likely believe the department only focuses on cost analysis. An organization’s procurement department finds and purchases the goods the company will use as part of its supply chain.The procurement department regularly analyzes every aspect of the procurement process to attempt to cut unnecessary expenditures and save money.

One of procurement’s most important responsibilities is supplier relationship management. The procurement department finds suppliers for the company, then oversees the organization’s interactions with those suppliers. An organization’s supplier relationships are key to the company’s success, so procurement must make sure both the company and its suppliers are benefiting from the relationship and that the relationship doesn’t hit any roadblocks.