You Had Me at the Green Font, You Lost Me at Procurement
When people ask me about procurement (which does not happen often tbh), I struggle to know where to begin… Why? Because procurement is everywhere. It touches every aspect of our lives, from the toothpaste you use in the morning to the bus you take to work, school, or a doctor’s appointment. It even influences the options you have for education, books, and so much more.
Take the bus, for example. Have you ever wondered why your bus comes every twenty minutes, every half hour, or once an hour? It’s because, at some point, the organisers of the bus system analysed the cost of running the service at different intervals and weighed it against the demand (i.e. the number of people who would be taking the bus at these interval - How many people use the bus every twenty minutes? Every hour?). By determining the cost-to-demand ratio, they assigned the right service at the right cost for the right people. And in essence, this is what procurement is :)
Procurement is about getting the right product, in the right quantity, at the right time, in the right place, and at the right price. And that last part—the price—is what makes all the difference. You might see a product that’s shiny and packed with features, or one that’s bare-bones, yet both could be priced the same. What determines your choice? Your demand and the price.
Procurement in Everyday Decisions
When you rent a place, you’re procuring. You consider the location, the proximity to your workplace, and how much time and money you’ll invest in making it your own. Even the clothes you wear are a result of procurement decisions. Take jeans, for example. Everyone owns a pair, but the process of buying them varies. Some people go to the nearest store, try them on, and make a purchase. Others rely on a brand to guide their decision. Some believe that if jeans don’t cost a certain amount, they’re not worth the money. But how do you determine quality? How do you ensure the price reflects the actual cost of production, not just the manufacturer’s profit?
Cost vs. Price
This brings us to the difference between cost and price. Cost is what the producer incurs to create a product—whether it’s toothpaste, a bus service, or a building. Price, on the other hand, is what you pay. Price equals cost plus profit, and that profit margin—whether it’s 15% or 50%—is determined by procurement.
Procurement is everywhere, shaping the decisions we make every day. It’s a fascinating field that deserves more attention, and I’m excited to explore it further in this blog. Stay tuned for more insights into how procurement touches all of our lives!
