The 9 Steps in an Effective Procurement Process

The 9 steps in an effective procurement process will assist the organization in a precise way. In this way, the chances of error are eliminated and the visibility and coordination are maintained between all the partners in the procurement process. An organization may utilize these focuses as comprehensive rules while characterizing their procurement processes.

• Identification of procurement needs: The primary phase in the procurement process is to identify the procurement needs. The procurement needs can be easily identified by the end-users as and when required. A purchase requisition form is required to raise the procurement needs. It is also known as purchase intent. The purchase indent should have all the details of the materials to be procured.
• Review of purchase requisition: Before initiating the procurement of materials, the purchase requisition must be should be approved by all the concerned departments, head, budget approving authority, etc.
• Selecting the right vendor: The selection of appropriate sourcing of a vendor is a vital factor in the procurement process. Having proper data of the qualified vendors, their business information, etc. will ensure that the right vendor is contacted for procuring the materials.
• Requesting for Quotation: The procurement team sends a request or inquiry to submit the item quotation. This document includes details about the material, its description, quantity, unit, requirement date, etc.
• Evaluation of quotation: From the “n” number of vendors to whom quotation has been sent, the best price is chosen from the number of alternatives. Evaluation of vendors is done on various parameters like- transportation charges, freight costs, delivery terms, etc.
• Purchase Order: The purchase order is the formal documentation that is used by the organization for confirming the vendor. A typical purchase order contains the required materials, pricing, quantity, terms, and conditions.
  
• Receipt of Materials: After getting the items, the buying organization must seek a receipt of materials that contains all details of the items, pricing, and quantity. The inspection shall be carried out of the inventory. If any defect is seen, immediately it should be notified to the supplier company.
  
• Invoices and Payments: The invoice is processed by a three-way matching process. In this, the invoice is checked against the purchase order for the rates, terms, and conditions.
• Maintaining Records: For an organization, keeping and maintaining procurement records is very important. The procurement record involves many transactions such as purchase requisition, RFQ’s, quotations, comparative statements, and its approval, purchase order, goods receipt notes, payments, and invoices.

The procurement procedure includes a series of activities that take place to make sure the necessary materials are accessible at the right time, right place, and in the right amount. Procurement is a key business function which impacts the tasks, store network, quality, cost and benefits of most business association. Consequently, it is significant to have a successful and powerful procurement process.