Procurement is the process and structured method used to streamline a company’s procurement process and obtain a promising outcome whilst saving money and time. It also helps in building supplier-management relationships. It is a series of methods that deals with purchase order and approval of the invoice. Procurement describes the activities involved in purchasing the items from a supplier and it varies in its operations. It is not possible for higher authorities to look into the process; hence, companies look for procurement experts.
The entire method comprises several elements like, supplier research, purchasing request, conversion, review phase, evaluation of the received order, payment, tracking record and more. Read on to know the detailed process of procurement.
Needs recognition – This is the first step in a procurement process that is identifying the need for a product. Whether it is a fresh, new order or recurring purchase, it must be analysed before creating a purchase request.
Purchase requisition – The method begins with a purchase requisition where a procurement professional sends a purchasing request to the purchasing section. The request can be made in the form of paper, phone or electronic means.
Review of request – The finance team reviews the purchase request. When the requests are approved, it becomes POs, whereas, the rejected ones come back with the reason for rejection. Procurement subcontractors easily handle this with a purchase order app.
Approval of budget – In companies, when the team of procurement specialists raise a PO, it is forwarded to the finance division for approving the budget.
Requests for quotation – When the budget is approved, the team sends the quotation request to vendors with the aim of receiving the bids and comparing them to find the right vendor.
Negotiation and contract – The contract signing and negotiation are completed after the selection of the vendor, who gets the purchase order. The contract gets activated only when the vendor acknowledges a PO.
Receive orders – It is the duty of the vendor to deliver the promised products within a given time frame. After receiving the order, the procurement experts order the quality checker to examine the goods and notify the vendor if any issues are found in the received packages.
Three-way matching – During this point, documents from the purchase order, slips from packaging and vendor invoices are checked to see if there is any discrepancy and to ensure that the transaction is done is without error. Once you find an error, it must be immediately addressed.
Invoice approval payment – When you find no discrepancy in the three-way matching, the invoice is approved and is sent to process the payment.
Keeping record – Once the payment is done, the buyers make a record for it for auditing and bookkeeping. All documents right from the initial step till the last are stored in safety.
By hiring procurement subcontractors, you can streamline the entire process and keep it transparent. The specialists minimise the chaos, keep the process accurate, lessen the workloads of stakeholders and bring transparency in the whole method.