The procurement process consists of identifying the goods your company needs and finding ways to get them. At a first look, this process seems quite simple, but it’s actually a lot more complicated than that. The process has all kinds of underlayers and stages that you need to follow if you want everything to go smoothly. Before making any moves, make sure you know all the stages of the procurement process.
What is the procurement process?
Procurement is some sort of more complex purchasing. Your company needs a series of goods and product to function. These come from the outside, so you need to find some vendors where you can get them from. The focus of the procurer shouldn’t be to get the products at a good price. They are more focused on quality, and finding something that does the best job.
It sounds simple if you put it into words. However, there is an entire process behind this transaction. In fact, it is not only a transaction, so there are plenty of things to pay attention to. Here are the stages of the procurement process.
Stages of the procurement process
You need to be familiar with all these stages of the procurement process before initializing it. If you respect them, everything will go smoothly, and you will get the best products without too much effort.
Stage 1 – Recognizing the need
Before you make any moves, your company needs to admit that it needs some new goods. Make an assessment of your means of production, and see if anything needs improvement. If it does, then it means it’s time to start a procurement process. You can either get these new goods from an external source, or you can even produce them internally.
Stage 2 – Identifying the need
After you have found out you need to refresh your goods, you should discover what goods you need. In some cases, you might have ordered that specific product before, so the things are easier. If not, then you should perform a thorough analysis of your production processes and their requirements. This way, you might find out what you are lacking.
Stage 3 – Identifying possible sources
Now, it’s time to find out the best source for the specific product. If it’s not the first time when you’re placing an order, your company must have already established some connections with a series of vendors. In case their services were satisfactory, you can still order from them. If you don’t have such connections, it’s time to do some research on the market, and find the most suitable vendors.
Stage 4 – Setting up a price
Once you’ve evaluated all the vendor options, it’s time to decide on the price you are willing to pay. You should first see what the offer is, and investigate if these prices might change. For instance, you might need goods that are available immediately, and this might cost you a little more.
Stage 5 – Placing the order
At this point, you must have decided on the price and the vendor who can offer you the best services. Then, it’s time to place your purchase order. Apart from actually ordering the products, you will sign an agreement where you mention the price, some rules both parts need to respect, and possible specifications for the products.
Stage 6 – Delivering the order papers
After the purchase order is done, both parts need a copy. The part who wrote the order has to deliver it to the other part either personally or electronically. Usually, this purchase order mentions the delivery method as well.
Stage 7 – Expediting
This stage is concerned with any other specifications related to the order. On this expedition, the vendor will specify if the order is likely to be delayed or not. Therefore, it should mention when the products should arrive, when the payment should take place, and any other specifications related to delivery.
Stage 8 – Inspecting the order and issuing a receipt
This stage can occur only after the order has arrived at the company. Before accepting the transaction, the company needs to inspect the products thoroughly. If there’s something wrong with them, it can send them back and reject the exchange. When everything is okay, you can accept the order, and the vendor will issue the receipt.
Stage 9 – Invoice and payment
At this point, we are getting near the last stages of the procurement process. For procurement to be complete, you’ll need three papers to end the transaction. At first, you need the invoice that should come with the order. Then, you need to sign a document that you have received the order and, in the end, to have the initial purchase order.
Before paying, make sure everything is alright. Once you sign the papers, you won’t be able to return the products in case they are not working properly. Therefore, do another round of checkups before agreeing to pay. If there are no issues, you can make the payment without worrying.
Stage 10 – Keep records
The stages of the procurement process per se are done, but you still need to keep an eye on the product, and to perform regular maintenance operations. You should keep all the papers to account for all the possible taxes. Also, in case something breaks, you will need them for the warranty. If you have been happy with this order, you should keep all the references, so you can order from this vendor again.
The stages of the procurement process are extremely important for all business people. When you’re looking for goods for your company, do not skip any of them. Each step is vital for the well-functioning of your business, and for a successful transaction. Procurement is about quality and strategy, so you should pay a lot of attention to the vendors you select.
Negotiation is also quite an important part in the procurement process, but the central thing is not the purchasing itself. Procurement starts at the moment when you realize you need some new goods, and ends once you have made the payment and made sure all the papers are alright.
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