The task of the enterprise area Procurement is to ensure that an enterprise is supplied with the necessary input materials and services it needs in order to produce the products and perform the services it sells.

A major aspect of procurement is the provision of the necessary input elements as and when they are required and at minimum cost. The procurement function is not only responsible for ensuring that an enterprise is adequately supplied with raw materials, operating supplies, semi-finished products, and trading goods – it also embraces goods receiving activities (including checking and stock putaway), quality inspection of incoming materials, invoice verification, and the release of invoices for payment.

The procurement function covers both the operational procurement of materials and services and the administration and management of sources of supply. In this connection, a distinction is made between external suppliers (vendors) and internal suppliers (the enterprise’s own plants).

The operational procurement of materials and services includes the following tasks:

• Identifying and quantifying requirements of materials and services

• Procuring materials and services

• Monitoring timely delivery by suppliers

• Receiving deliveries of materials (including stock putaway where appropriate) and acceptance of services provided

• Verifying vendor invoices with regard to the materials actually supplied and services actually provided

• Checking the quality of materials delivered

Sourcing administration involves the following tasks:

• Determining suitable sources of supply

• Entering into longer-term supply relationships in the form of outline purchase agreements

• Determining the validity of sources of supply and the extent to which they are actually used