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8/15/2017 Here Are The Stages in the Procurement Process

Here Are The Stages in the Procurement Process


Sean Kolenko (H ps://Blog.Procurify.Com/Author/Sean/)

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procurement-process/)

For the uninitiated business owner or, for that


ma er, the novice the procurement process can
appear to be a simple, basic procedure.

Locate needed goods. Pay. Receive purchased


goods. Document transaction.

But like all important (integral!) business functions,


procurement is a layered, uid business process
with multiple moving parts there are numerous
stages in the procurement process.

Procurement is so dynamic, in fact, that it requires


constant analysis and monitoring by someone (or a
team) within an organization. There is always more
to know/more data to analyze/more forecasts to
produce all of which is a responsibility of
procurement.

Sowhat are the stages in the procurement


process? What are those constantly evolving pieces
in procurement?

Stages in the Procurement Process

As one learns/reads more about the procurement


realm, it becomes glaringly obvious that each of the
writers, theorists and consulting rms involved in

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8/15/2017 Here Are The Stages in the Procurement Process

procurement has a slightly di erent take on the


stages in the procurement process.

With that in mind, our friends at the Chartered


Institute of Purchasing and Supply
(h ps://www.cips.org/) and businessdictionary.com
(h p://www.businessdictionary.com/) have cobbled
together a solid list of the critical stages in the
procurement process.

Here it is:

Step 1: Need Recognition This is a seemingly


obvious step, but one that needs to be mentioned.
A business owner (or procurement department)
must recognize a product is needed in order to
purchase it. That product can be either a brand new
item, or one that is being re-ordered.

Step 2: Speci c Need Does your industry have


speci c requirements for various products. If that is
the case in your industry, be sure you are up-to-date
on those requirements and order accordingly.

Step 3: Source/Examine Supplier Options Every


business needs to determine where to get their
goods. Some companies have an approved vendors
list (this is a recommended practice) while others
are still trying to determine who the best suppliers
are. Once a supplier is chosen, companies should
stick with that relationship and try to establish
preferred pricing.

Step 4: Price and Terms Once a supplier is chosen,


companies should stick with that relationship and
try to establish preferred pricing and speci c terms
(i.e. delivery).

Step 5: Purchase Order The purchase order


(h p://blog.procurify.com//2013/09/23/all-you-ever-
needed-to-know-about-purchase-orders/) is used
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8/15/2017 Here Are The Stages in the Procurement Process

the formal contract used to buy the product. The


purchase order outlines the price, speci cations
and terms and conditions of the product or service
and any other additional obligations.

(h p://start.procurify.com/3steps/)

Step 6: Delivery The transfer of the purchase order


via email, mail or fax (email is highly recommended).

Step 7: Expediting This stage addresses the


timeliness of the service or materials delivered.
Delays, for many businesses, are important. The
purchase order will have expected delivery date
information.

Step 8: Receipt and inspection Once delivered,


the receiving company inspect and, subsequently,
accepts or rejects the product. Rejection is almost
always due to a damaged product.

Step 9: Invoice Approval and Payment At this


stage, three documents must match when the seller
wants payment the invoice, the receiving
document (a ached to the product) and the
original purchase order. This is known as three-way
matching. If there is a discrepancy, it must be
resolved before payment is made.

Step 10: Record Keeping The receiving (buying)


company must keep good records. This means
saving all relevant documents for every completed
purchase.

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8/15/2017 Here Are The Stages in the Procurement Process

How can e-procurement help?

FREE WHITEPAPER: Get the Three Steps To Be er


Procurement whitepaper and learn how to
establish stronger spending policies across your
organization. (h p://start.procurify.com/3steps/?
utm_campaign=blog-inline-text)

An e-procurement solution
(h p://blog.procurify.com//2014/08/11/e-
procurement/) can be a signi cant source of help in
various stages of the procurement process. For
instance, an e-procurement solution will
electronically generate purchase orders
(h p://blog.procurify.com//2014/11/18/cloud-
purchase-order-system/), with all of the requisite
information.

Also, an e-procurement solution is a critical tool


when it comes to delivery and record keeping. With
an e-procurement solution, all purchase orders will
be sent electronically in the system (an email
notifying all parties will be sent as well), ensuring
delivery is completed immediately.

Finally, an e-procurement solution will catalogue


every transaction in the system, ensuring your
records are kept up-to-date. Those records are of
critical importance for nancial forecasting, or in
the vent of an audit.

The bene ts
(h p://blog.procurify.com//2015/05/12/7-bene ts-
of-e-procurement/) of an e-procurement system like
Procurify
(h p://www.procurify.com/bene ts) extend to each
stage of the procurement process. Stream line your
purchasing and procurement processes, reduce
employee headaches, eliminate annoying
paperwork. Switch to an e-procurement system like
Procurify today (h p://www.procurify.com/signup)!

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8/15/2017 Here Are The Stages in the Procurement Process

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8/15/2017 Here Are The Stages in the Procurement Process
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7 responses to Here Are The Stages in the Procurement Process


Pingback: Purchase and Inventory Management So ware (h p://blog.shivit.com/index.php/purchase-inventory-
management-so ware/)

REPLY

Abubakar msa says:

November 12, 2016 at 10:45 PM (/2014/09/16/stages-procurement-process/#comment-1901)


Its actually a good source of information that is needed, keep it up and give extensive narration of the points. Other wise I
am humbled using this site.

REPLY

Nitant says:

November 14, 2016 at 5:56 PM (/2014/09/16/stages-procurement-process/#comment-1903)


Thanks, Abubakar. Were happy this was of help to you!
Indeed, a lot of blog posts and papers on procurement fail to delve too deeply into the concepts they explore.
This tendency o en obscures procurement literature in general, and were trying our best to do things
di erently.

REPLY

Aika says:

January 3, 2017 at 6:18 PM (/2014/09/16/stages-procurement-process/#comment-1948)


good lesson learned , now I need to start a business

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