There are several different purposes for which Goods/Services are procured by any enterprise few basic types of procurement’s are
Consumption vs Stock
- Procurement for stock: This type of procurement is made mostly to fulfill the requirements of production. Raw materials or components required for production will be procured and stocked. A material should have a master data stored in the ERP system for it to be ordered for procurement
- Procurement for consumption: This type of procurement is used when the goods bought were directly consumed. The materiel may or may not have a master record maintained within the ERP system the purpose of consumption should be specified
External and Internal
External procurement: Procuring the material from external vendors is called external procurement there are different types of external procurement’s
- One time procurement : It is a type of procurement were orders are placed as per the requirement of goods/services were the demand is irregular
- Contracts with release orders: Long term agreements will be made with the vendors and the goods/services will be shipped by triggering release orders. They give flexibility to negotiate price with the vendor. Contracts will always have a validity date
- Schedule agreements with schedule lines:This type of procurement is used when the requirement of the material/service is timely. Order will be fulfilled based on the timeline provided in the agreement
Internal Procurement:Large corporations with diversified business may have different bookkeeping systems when goods are procured within them internal procurement is used
Special types of procurement’s
Consignment Stocks: This is a type of procurement were the stock lies within the the premise of the organisation but the ownership lies with vendor the item gets billed only when it is consumed or used for production
Pipeline handling: In this type of procurement business will not order any goods they will be available for consumption via special medium like Electricity via cables, Oil and gas with pipe lines etc