ABSTRACT
The procurement process typically includes the functions of determining the purchasing specifications, selecting the supplier, negotiating terms and conditions, and issuing and administrating purchase orders. The first category, direct procurement, is production-related procurement and the second, indirect procurement, is non-production-related procurement. Direct procurement is generally referred to in manufacturing settings only. Direct procurement, which is a major focus in supply chain management, directly affects the production process of manufacturing firms. In contrast, indirect procurement activities concern operating resources that a company purchases to enable its operations. The step in the procurement process is to identify and select suppliers. Many Lean tools such as value stream mapping, 5S-workplace organization, visual, kaizen, and standard work can be applied to procurement processes. Ariba started off with the idea of purchasing staff buying items from vendors who provided their catalogs online, as the typical procurement process can be labor-intensive and often costly for large corporations.
