Procurement is the act of purchasing goods and services. The term is used mostly in big corporations that obtain goods and services to accommodate their day to day running. As easy as it may seem on the definition, procurement is a process that requires time and planning.
The process of procurement
The procurement process involves the following
1. Planning and preparation
Before making a purchase of any sort, the purchaser has to prepare a list of what is required, the quantities and the intended budget. Quality standards are also determined. This part of the process is done by the company that is planning to do the purchase.
2. Invitation of requests
The company has to invite suppliers to bid for the opportunity to supply the goods or services. Most companies do so use newspaper advertisements while others send invitations to different companies via mail or calls.
3. Identification and shortlisting of potential suppliers
The buyer first has to identify the suppliers that are likely to provide the needed goods and services. Many suppliers send quotations and send them to the buyer which the buyer then uses to do the shortlisting process.
4. Quotation analysis
Companies that offer the required services or goods are then asked to prepare quotations and present to the procurement department for analysis. The following factors are considered in the analysis:
- Analysis of the value of goods or services
- Determination of the standards of the goods and services with reference to the company’s needs
- Research on the supplier to determine the trustworthiness
- Finally, the selection of a supplier that fits the requirements and standards according
5. Negotiation of price
After the presentation and quotation analysis as well as the selection of a supplier, the company then has to agree with the supplier on the price. The price has to meet both the supplier and the buyer’s needs. The company has to compare the price they are to use in the purchase with the profit that they intend to make on the same products. It is important for both parties to carry out the scanning of the documents. This can be done efficiently using a professional document scanner service.
6. Making of the purchase and contract administration
Once the price and quality have been determined, the two parties then have to agree on terms of supply as well as the payment scheme. A contact is then prepared with all these terms incorporated and both parties sign it.
7. Preparation of relevant documents
Such documents are called procurement documents. These documents are prepared by either of the two parties to complete the process. The documents have to include the terms of the buyer and seller’s agreement like the payment, payment schedule, standards of goods or services and terms of supply like the timing and quantity. Before putting the final signature on the documents which act as a contract. This type of service provider will ensure that the terms are acceptable to both parties and none of the two is being duped. The contract expiration and renewal terms are also important to look into.