Procurement is the acquisition of materials, services and technologies from the right source, at the right time and in the right quantity to meet the needs of the purchaser (Anthony, 2010). Factors that determined purchasing decision include material availability, purchased volume, delivery and handling, marginal benefit, and price fluctuation, but the most important factors is the amount of control purchasing and supply personnel have over materials availability, quality, costs and services (Anthony, 2010). Based on the consumption purposes of the acquired materials and services, the procurement activities are split into two categories. The first category being direct (strategic) purchasing and second being indirect (transactional) purchasing (Anthony, 2010). Direct purchasing involved the establishment of mutually beneficial long-term partnership between the buyer and the supplier (Anthony, 2010). Furthermore, the direct purchase material often involved materials that are crucial and have direct effect to the support of an organization’s distinctive competence. These crucial materials include raw materials, components and parts which are used in manufacturing process (Anthony, 2010). In contrast, indirect purchasing involved purchases of operating resources as well as repetitive purchase from same vendor through blanket order (Anthony, 2010). The operating resources comprised of wide variety of consumers and services that are not part of the bill of materials such as MRO items (Anthony, 2010).
The procurement process usually started with supply sourcing, however part of the sourcing decision involved determined whether to purchase internally or externally (Anthony, 2010). If the sourcing decision is to purchase externally, then the supplier who meet the purchase material specification need to be qualified. Searching and indentifying the source of supply can be done through variety of ways. For instance, World Wide Web search through search engines,...