Procurement Process

Select two procurement types and describe how your startup could use them.

My startup is a parking application known as MyPark. I intend to use the contract and spot purchasing methods. Contract purchasing involves documented agreements that are used in the long term (Laudon & Traver, 2018). These goods and services are critical to the process of production. These include the user interface, security systems, internet, computers, programs, and software. This avenue will also procure supporting goods such as office equipment and maintenance services. Contract purchasing will be important for negotiating prices to achieve post-friendly discounts based on quantity. I will also be able to specify the required quality, ensuring that the products are consistent. The extensive period before payment will allow the startup to consolidate funds and honor the obligation within its capability, as the orders correspond to the financial position and current orders.

The second method of procurement is spot purchasing. This mode of purchasing will be instrumental while procuring goods on a need basis (Laudon & Traver, 2018). The indirect goods that are occasionally required for production will be purchased using the method. This requires the company to have liquid cash for such emergent purchases. Purchasing such items as required will enable the startup to find the best prices due to the lack of commitment to one supplier. In addition, the procurement method is ideal for a startup that lacks extensive financial resources to purchase all goods and services in bulk. The items that will be purchased using the method include utilities such as water, electricity, toiletries for the offices, minor office supplies, stationery, and gadgets that are not critical to the entire process of app development. Mixing both methods will allow the company to balance its financial resources and plan appropriately.