2. Introduction
Basically procurement is the process of
acquiring goods and services from outside the
external sources. Goods, services and works
supplied by external sources must meet the
standard requirement outline by the buyer. The
US Defense Acquisition University (DAU) defines
procurement as the act of buying goods and
services for the government.
3. International Procurement
In a global economy, international
procurement is a term used to describe the
process of allowing firms around the world to bid
on contracts for goods and services.
4. International Procurement
The concept has gained popularity as shipping
and transportation costs have decreased due to
an influx of cheap, readily available fuel. The
globalization of large corporations has allowed
them to reap the benefits of lower labor and
materials costs while still selling the same quality
and quantity of products.
5. Benefits of international procurement
Lower the costs
• In international procurement, industrialized
nations purchase goods from countries with a
lower dollar, gaining in the currency exchange.
• Product specialization - some items have a lower
cost of production, based on the natural or
human resources available in different locations.
6. Benefits of international procurement
Stimulation of a global economy
• Each nation must have some contribution or
basket of goods that they can offer to potential
customers.
• Country which have resources that could not be
produce by other country can benefit them, thus
vice versa to the other country
• For instance, A country with no natural oil can
build an oil drilling mechanism as to be supply to
country that have natural oil.
7. Challenges in international procurement
• Supplier-related issues
• Strategy selection
• Reducing costs and achieving savings
• Accurate data
• Managing stakeholders
• Risk mitigation
• Cultural understanding
• Language and communication difference
8. Challenges in international procurement
• Logistical issues
• Legal issues
• Finding the right tools
• Currency risk
• Recruiting, retaining, and training talent
• Time
• The RFx process
9. Challenges in international procurement
Top 3 Supplier-related Issues
1. Finding suppliers
2. Supplier relationship management and
performance evaluation
3. Evaluating potential suppliers and selecting the
right one
