Steps in the Procurement Process

Aligning your procurement function with your corporate strategy is only one part of the

ultimate goal of procurement. Goods and services also need to be purchased.

The process of purchasing these good and services is known as the Procure-To-Pay Cycle.

The entire Procure-To-Pay Cycle can be an involved process with numerous steps:

• Identification of Requirement

• Authorization of Purchase Request

• Approval of Purchase Request

• Procurement

• Identification of Suppliers

• InquiriesReceipt of the Quotation

• Negotiation

• Selection of the Vendor

• Purchase Order Acknowledgement

• Advance Shipment Notice

• Goods Receipt

• Invoice Recording

• 3 Way Match

• Payment to Supplier
Procurement Methods

Generally speaking, there are six procurement methods used by the procurement team in
a company. The actual names of these could vary depending on your company and
industry, but the process remains the same. The six times of procurement are open
tendering, restricted tendering, request for proposal, two-stage tendering, request for
quotations and single-source procurement.

Open Tendering

Open tendering is shorthand for competitive bidding. It allows companies to bid on goods
in an open competition or open solicitation manner. Open tendering requirements call for
the company to:

1. Advertise locally
2. Have unbiased and coherent technical specifications
3. Have objective evaluation measures
4. Be open to all qualified bidders
5. Be granted to the least cost provider sans contract negotiations

Arguably, the open tendering method of procurement encourages effective competition

Restricted Tendering

Unlike open tendering, restricted tendering only places a limit on the amount of request
for tenders that can be sent by a supplier or service provider. Because of this selective
process, restricted tendering is also sometimes referred to as selective tendering. Like
open tendering, restricted tendering is considered a competitive procurement method,
however, the competition is limited to agencies that are invited by the procuring team.
The procuring entity should establish a set of guidelines to use when selecting the
suppliers and service providers that will be on the invitation list. Randomized selections
will not bode well for procuring. This method is selective to find the best-suited and most
qualified agencies to procure goods and services from. It’s also employed as a way for the
procuring team to save time and money during the selection process.

Request for Proposals (RFP)

Request for Proposal is a term that is used all across the business world. Social media
managers receive RFP’s from potential clients all the time when a client is seeking a new
manager of their venture. This kind of proposal is a compelling and unique document
stating why the business is the best fit for the type of project at and. Similarly, in the
procurement world, a RFP is a method used when suppliers or service providers are
proposing their good or service to a procurement team for review. If you’re a supplier,
understanding the in’s and out’s of quality service management is key to winning your bid.
Read more about this in service quality management.

Two Stage Tendering

There are two procedures that are used under the two stage tendering method. Each one
of the procedures has a two stage process. This can be disadvantageous for some
procurement teams if there is a time limit on securing a contract. In the same vein, this
option is more flexible for both parties, allowing more room for discussion to meet mutual
needs.

Request for Quotations

This procurement method is used for small-valued goods or services. Request for
quotation is by far the least complex procurement method available. If you have the
option, use this method to ensure a fast procurement process and not a lot of paperwork.
There is no formal proposal drafted from either party in this method. Essentially, the
procurement entity selects a minimum of three suppliers or service providers that they
wish to get quotes from. A comparison of quotes is analyzed and the best selection
determined by requirement compliance is chosen.

Single-Source

Single source procurement is a non-competitive method that should only be used under
specific circumstances. Single source procurement occurs when the procuring entity
intends to acquire goods or services from a sole provider. This method should undergo a
strict approval process from management before being used. The circumstances which call
for this method are:

• Emergencies
• If only one supplier is available and qualified to fulfill the requirements
• If the advantages of using a certain supplier are abundantly clear
• If the procurer requires a certain product or service that is only available from one
supplier
• For the continuation of work that cannot be reproduced by another supplier
10 Key Roles and Responsibilities of a Purchasing / Procurement Manager

Are you pursuing the position of Purchasing or Procurement Manager? Then you should know that
these two are the same thing. The responsibilities of this job remain the same, regardless of how the
employer decides to call this position. Before applying or even accepting such a job, it is highly
recommended to know what it is all about. Do you know that are the roles of a purchasing manager?
How about the responsibilities? To make sure that you will fit in right and that you will able to deliver
great results, you need to be aware of these aspects. Here are 10 key purchasing / procurement
manager responsibilities, so that you will grow familiar with this position.

1. Supplier Evaluation

Before the company gets to sign a contract with a particular supplier, you will have to evaluate the
supplier to see if it is worth collaborating with it. You will look at the price and quality of the provided
items, and how fast a delivery can be completed.

2. Interviewing Vendors

You will also have to talk, face to face, with vendors, to learn more about their products and services,
to make sure that your evaluation is correct and comprehensive.

3. Visiting Supplier Plants and Distribution Centers

Visiting the supplier’s plant and distribution center can tell you a lot about a particular supplier. Is the
supplier meeting the standards? Is it working efficiently in order to meet your company’s demand?
Are the manufacturing, storing, and shipping conditions appropriate? These and other questions will
be answered during such visits.

4. Attending Trade Shows, Conferences, and Meetings

A purchasing/procurement manager is always in a constant learning process, as it is mandatory to be

5. Unrolling Analysis of Price Proposals and the Financial Reports of the Company

Your company will always want to obtain the best price for each acquisition, so it is your duty to
analyze the price proposals of suppliers and the financial reports of the company, before negotiating
the best price.

6. Negotiation of Various Contracts

As mentioned before, one of procurement manager responsibilities is to close great deals in the behalf
of the company, so being good negotiator is definitely an advantage.
7. Collaboration with Suppliers for Agreeing Upon Policies

You will have to collaborate with the suppliers in order to come up with convenient policies that will
determine details concerning the shipment of products and other details that will keep the workflow
steady.

8. Collaboration with Staff Members for Meeting the Standards

The staff members should be trained concerning the acceptable quality of the received goods, how to
determine defective or unacceptable goods, and what actions to take in such cases. So you will be in
charge with their preparation when it comes to such knowledge.

9. Monitoring and Evaluation of Unrolling Contracts

Once a contract is signed, you will have to keep an eye on it to make sure that the vendors will respect
their part of the contract. And, of course, when needed, you will have to make the required
adjustments to the existent contracts.

10. Maintaining and Reviewing Records of Bought Items

You will constantly have to be aware of the items that have been purchased. Thus, you need to have
up-to-date inventories, plus detailed information about a product’s price, performance, and delivery.