The five rights of procurement, which in some literature is referred to as key purchasing variables or purchasing factors, express the basic objective of procurement, and the general criteria by which procurement performance is measured.

What are the five rights of procurement and why are they important?

The five Rs of procurement, as they are often called are;

Right quality

As a purchasing variable this means obtaining goods which are of a satisfactory quality meaning they are fit for the purpose intended be it, meeting internal requirements of an organization or external customer needs. The pursuit of this objective means ensuring specification of requirements and quality standards are accurately done.

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Right quantity

The decision to obtain goods of the right quantity is important since it enables the organization to meet its demand and maintain service levels while minimizing excess stockholding. This therefore means understanding demand forecasting, inventory management, as well as having a reliable stock replenishment system.

As a procurement specialist a mistake at this variable will mean that you either have less stock which leads to ultimate customer dissatisfaction due to slow production process or excess stock and that result into things like, storage cost, risks of deterioration etc.

Right place

The objective here is to ensure that goods are delivered to the appropriate point of delivery. Check on our distribution plan, does it guarantee delivery? What about the transportation plan and packaging? How effective are they?

An incorrect answer to any of these questions would mean goods being delivered to the wrong venue and that will result into extra charge in correction costs not to mention delays that result from it. It could also lead to goods being damaged while in transit or even at times stolen.

Right time

Securing delivery of goods at the right time sees to it that 1) goods are not late, since this would result into production delays, or 2) goods are not too early in which case the organization would incur the cost of holding inventory. The procurement manager, under these circumstances, will have to focus on demand management as well as supplier management.

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The right price             

In pursuits of the five rights of procurements you need to ensure that you have a price that is reasonable, fair, competitive and affordable. The right price means the inputs you procure don’t affect your profit margins. There are a number of analyses you will have to conduct such as price analysis, supplier cost analysis, and competitive pricing and negotiation all of which will help you arrive at the right price

Conclusion

The operational objective of the procurement department is provision of the inputs which are to be converted either directly or indirectly into finished goods and services. Traditionally this would mean:

• Inputs of the right quality
• Delivered in the right quantity
• To the right place
• At the right time
• For the right price

In the next series of articles and videos (which by the way you can find here) I will go over each of these five rights of procurement in detail.

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