Procurement and Purchasing

PROCUREMENT AND
PURCHASING

Procurement and Purchasing 1
The overseas outsourcing seems to be costly and cost savings do not appear to be that great.
Recently it has been observed that several UK manufacturers have relocated production to the
low-cost regions worldwide comprising India, Mexico, and China. The motives for
international outsourcing seek cost-effectiveness as quite recurrent. The cost savings also do
not seem to be as great but it can be helpful in attaining cheaper labor. Although other
expenses can be incurred due to the distance between the host location accompanied by the
risks and uncertainties. The risks and uncertainties can also lead to unanticipated costs which
balance gains from the cheaper labor. It can also result in losses to the outsourcer. Other than
the challenges, outsourcing also offers capable proficiency, concentration on essential
activities, better risk management, flexible staff, running business 24*7, increased in-house
efficiency and offering a business competitive advantage (Ray and Jenamani, 2016). The
comprehension concerning challenges of outsourcing has been helpful in understanding
outsourcing practices, efficient practices, ethics and supply chain advancement. This essay
comprises the procurement and purchasing of Tesco. Tesco is a multinational retailer of the
UK. It was established in 1919. The stores of Tesco go from convenience stores to large
hypermarkets. The website of Tesco was the first to enable people to purchase things from
the internet.
Both procurement and purchasing are the processes that are done during the procedure of
obtaining goods and services in the organization. Although both procurement and purchasing
differ in terms of methods and approach. The procurement comprises the activities
concerning acquiring goods and services. On the other side, purchasing comprises functions
linked to obtaining goods and services (Riley, et al. 2018). The procurement involves the
steps which take place before, during and after the purchase. Whereas purchasing involves a
straightforward procedure of obtaining the merchandise. The framework for the procurement
includes the steps like recognizing business requirements, recognizing, evaluating and
selecting authentic suppliers, negotiating contracts with the selected suppliers, initiating
payments to the suppliers and getting delivery and auditing delivery and ensuring obedience.
On the other hand, the framework of purchasing comprises placing an order, tracking orders,
receiving and auditing order, and making payment for the order. Tesco within the
procurement look for the goods and services not for resale (GSNFR) but for its group. Tesco
assists the business to ensure that the best value solution is offered in the place. In the
procurement process of the company, and insight can be gained concerning the way
procurement strategy is advanced. It constructs trusted partnerships with the supply base.

Procurement and Purchasing 2
Tesco cooperates with the different parts of the organization relying on specific needs. The
purchasing process of Tesco has been transformed the way it works with the suppliers. The
company has a reputation for being hard as it drives the best deal for the customers with fair
practices. The purchasing process in Tesco starts with the websites and then by means of a
budgeted amount it appeals to fill out a purchase appeal sanction form. It is more like an
appeal for the quotation from the supplier. If the message accepts then it goes to the
department which is accountable for the purchase’s endorsement. After getting approval, the
message is sent to the appeal quote from the supplier and then the supplier obtains the
message for placing delivery for the company.
The procurement process comprises different activities. It can be extremely beneficial when a
company is looking to reorganize its supply chain. The procurement process makes sure that
the best price is remunerated for the goods and services and time is saved by selecting the
most reputable vendors. It also reduces the order interruptions and faults. The procurement
process varies depending on the needs of the business. The companies are required to comply
with strict guidelines. The activities intricate in the procurement process are:
Identification of the goods and services required: The procurement process initiates with the
need for goods or services. The goods and services can be core like materials necessitated to
run the business or external like materials which the corporate ultimately sells. This activity
also comprises fixing a budget.
Explore and select vendor: This activity involves sourcing latent vendors and shaping their
capability to offer the finest value and quality for goods and services. It is quite significant to
find out the appropriate vendors to attain high-quality products at a competitive price along
with a strong reputation. The association is made with the vendors for the long term. The best
practice done in this area is identified as strategic sourcing (Cao, Navare and Jin, 2018). It is
a less responsive approach to the procurement as most of the key purchase requirements are
already in the place. This activity also includes sub-processes like compliance checks,
supplier relationship management, contract management, and more.
Acquiesce purchase requisition: The next activity involved in the procurement process is
getting consent from the core department which controls finances to acquire goods and
services. It comprises generating a purchase requisition document and acquiescing it to the
department. This activity is not all about essentially assembling everything from the vendor

Procurement and Purchasing 3
but receiving inside approval to do so. The procedure of turning a purchase requisition into
the purchase order is identified as a ‘purchase order process’.
Produce purchase order: This activity actually involves buying. Once the purchase
application has been permitted, the purchase order is issued to the vendor through the
department controlling finances issues (Ray and Jenamani, 2016). The purchase orders are
created by making use of electronic purchasing systems. The purchasing orders are
deliberated as legally binding documents.
Obtain invoice and order: This activity of the procurement procedure comprises attaining
invoice and order which does not necessary to take place with each other. The company sends
an invoice to the buyer describing the things comprised of the order. The invoice is a
document confirming the sales and repeats exactly when the payment is due.
Pay for goods and services: This step indulges in the finance team of the company. The
accounts payable team processes the invoice after attaining the order and description of the
invoice. The matching of the invoice against the permitted PO and delivery details for the
order enables a best practice known as 3-way matching in the accounts payable procedure.
After ensuring match up the account, the team sends imbursement to the seller within the
stated timeframe (Rafati and Poels, 2018.
When it comes to Tesco, the products and services are obtained by the company through
suppliers and dispersed to the customers through stores and online websites. The company is
deliberated as a power buyer to the suppliers built on the capability to acquire in bulk
(Rahman, et al. 2019). Tesco has even the capability to source other options by the network
of supplier chains to make sure its competitive advantage is maintained.
The core activity of Tesco is to gather intuition, buy, move and sell. The activities involved in
the model are concerned with procurement management activities. The essential activities
given in the model enables the company to constantly enhance proposals to the customers
making it the central of the organization. Tesco relies greatly on its suppliers for the products
and services. The increase in the costs can have an opposing impact on the margins. It is an
on-going effort for Tesco to source better suppliers (Pongsuwan, 2016). The suppliers also
assist Tesco to advance their own capabilities to meet the demand of the buyers in order to
make sure that sustainable production is well-maintained. The internal forces have also a
great role in the procurement process of Tesco as they enable strategies to be executed. The
manpower with the appropriate training and success planning leads to the growth of