Introduction

Procurement is a process by which an organization diversify its purchasing directions to increase the bottom line of the organization. It is an act of obtaining goods and services through the processes that include the purchasing planning, standard determination, specification, value analysis, price negotiation, time, location, supply contract, and inventory control as well.

Procurement is a strategy of lowering the purchasing cost in order to increase the bottom line, due to which the demand, time, location, and price are very important parts of the procurement. Similarly, if an organization has a centralized procurement system, in which the organization has its department that makes purchasing decisions, and fulfills the purchasing requirements of the different organization departments, then such strategy would be beneficial.

On the other hand, in the de-centralized procurement system, the different departments or production units make purchasing decisions based on their own choices accordingly the specifications, and demands, even they chose the supplier their selves, rather than a company certified or contracted supplier of the products or material.

In addition, with two different sets of procurement systems, both have different set of pros & cons that would be discussed throughout the paper. Furthermore, both systems have different strategies to adopt and meet the organizational requirements, and fulfil the criteria of the procurement system respectively to create value for the organization.

Thus, today’s marketplace has become more complicated since the competition in the market has increased, and consumers are seeking low cost along with quality, and consistency as well. Thus, in order to approach the procurement process, and understand the complications, and to evaluate possible solutions, we would evaluate Amazon.
Background

Amazon is an online retail shopping service. The company has four primary customers: consumers, sellers, enterprises, and content creator.Similarly, it operates in three segments: North America, International, and Amazon Web services.

In North America segment, the company focuses on the retail sales of the consumer products, and subscription through the North-American Focused websites. Similarly, in the international segments, the company focuses on the sales of consumer products, and offer subscriptions through internationally focused websites. It also provides services to the enterprises to access the platform, and sell products online.(CNN Money, 2016)

The company offers various range of diversified products like: books, games, computers, software, mobile phones, tablets, and some other consumer electronic products, and home appliances as well. Moreover, the company is a virtual super store that has every product used by consumers on daily basis.

Business Process

Amazon is online retail store having various range of products offered online. Similarly, Amazon is known for its low-cost products as compared to the market.Therefore, the question arises that how Amazon is able to lower the cost of product and being competitive in the market in terms of sales prices.

The answer to the question remains under the shadow of the procurement strategy of Amazon that it has contracted with the local market suppliers, and manufacturers to supply products as the demand arises in the market, or the product is purchased online. Moreover, the rising competition in the market has many complications, since the customers’ preferences are changing..............

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