The steps of a procurement operation is also the procurement process. Each of these processes must be done correctly to meet procurement objectives. Understanding the seven stages will assist you in optimizing and organizing your procurement process.
Procurement often refers to the finishing act of purchase. Still, it can also refer to the entire procurement process, which is crucial for businesses before final purchasing decisions. You can understand more about the process using this source. With that said, let's talk more about the seven stages of procurement.
The procurement process will begin with issuing requisitions done by the department or unit within the organization that recognizes the need to replenish its inventory. When stock levels of products approach the re-order level for existing items, or when a new activity that requires the good or service begins, the need for requisitions will arise.
Before handling requisitions, the control activity in the procurement process requires authorization. The permission guarantees that the request accurately reflects the unit's needs making it and that it is in the organization's best interests.
The procurement office can now begin the search for possible suppliers once you know the demand. Typically, for the purchase of routine items, the company will have a list of potential suppliers from which to choose from using previous interactions.
You can now finalize your purchase order after sending your contract to your supplier. Your purchase order is a document that should contain a full description of the product or service, total expense, quantity, and the workflow approval.
Once the purchase order reaches your supplier, they will go ahead and send you an invoice with the pricing and instructions regarding the payment. You'll also find details about your order on this invoice, so review and ensure that everything is correct for future reference.
Depending on the contract conditions, your delivery will arrive shortly after submitting a purchase order. Always keep track of delivery timestamps from order placement until arrival.
It is essential to maintain track of your invoices and payments. If any audits are undertaken, you will know exactly how much you spent throughout the specific period. Therefore, you will be able to categorize your expenses for more accessible analysis. It's critical to keep track of all your bills to determine whether you're overspending or staying within your budget.
Procurement is critical since it has a direct impact on how much money a company can save. When companies evaluate their procurement process regularly, they can be sure they meet their objectives. Changes might be made when the process isn't working as it should or when business problems arise. As a result, it's a good idea to stick to the procurement stages.