Procurement is the method through which businesses source products and services. Procurement can involve anything from invoice approval to the generation of a purchase order. You should seek the help of procurement agents to meet your sourcing needs, as they are aware of the entire process and can help your company save a considerable amount of money during the course of procurement.
Here is a look at the basic steps involved in all the procurement management process:
Recognition of need
The first and most essential step in the procurement procedure is to recognize the need for a service or product. If you do not recognize what is necessary, how can you acquire it?
Requisition
Once companies determine what they require, a requisition order is created and sent to the purchasing department of the business. The requisition can be in paper or digital form.
Order review
A requisition order does not necessarily convert into procurement. The finance department of the company views the request first and either approves or declines the same. In the case of approval, the order moves to the next step.
Budget approval
After approval, the procurement subcontractors submit the purchase order to the accounting department to finance the purchase.
Request for quotations
After budget approval, the procurement team sends the purchase order or PO to various vendors. These vendors then submit a quote on the prices for the products listed on the PO. All the quotes are compared and the order goes to the vendor offering the most competitive rates.
Contract and negotiation
After selecting the vendor, the procurement agents negotiate about the prices and come to an agreement. The vendor and the company then sign a legally binding contract acknowledging the PO.
Receiving the services or products
The next step is to wait for the vendor to deliver the products and services that your business requisitioned. The company must check the goods and consult the supplier in case of any issues with the received products.
Matching 3 integral documents
This next step is crucial to determine whether the procurement process went without a hitch. You need to compare the purchase order, the vendor invoices and packaging slips to check for discrepancies. If you find any irregularities, the same must be addressed soon.
Payment approval
If the invoice matches, the same is sent to the accounting department for payment clearance. This process can vary depending on the norms of the company in question.
Record keeping
Maintaining a record of every expenditure is crucial. Most companies today use computers for bookkeeping and auditing purposes. All of these records are maintained in a centralized system.
While it is possible for an in house team to handle the entire sourcing procedure, hiring agencies to do the same is easier. Procurement subcontractors can provide their assistance through freelancing. Small businesses can hire the services of these workers to arrange goods and materials.
Hiring outside agencies help you avoid having an in house purchase department. At the same time, it ensures that you source materials from the best suppliers at the most competitive rates.
