To have an efficient procurement process, there are several steps to take, to have a proactive and efficient requisition. Any types of procurement inefficiencies can cost organizations huge losses in cash, due to delayed purchases, missed discounts, and transaction disputes. All procurement management process involves several elements, including requirements determination, supplier research, value analysis, raising a purchase request, reviewal phase, conversion to purchase order, contract administration, monitoring/evaluation of received order, three-way matching, payment fulfillment, and record keeping.
The preliminary step would involve recognizing the need for a product. In this step, the needs are analyzed, and the availability is double-checked.
The first step would start with the purchase requisition. This would entail a request for procurement (either paper form, electronic, or phone), to be sent out.
The second step would be to review the request. Once it’s reviewed by the procurement or finance team, it can then move to the next step, if it’s approved. All rejected requests would be sent back, while approved ones would become POs.
Budget approval, the third step, is when once the procurement team raises a PO, it will then be forwarded to the accounting department, to receive budget approval.
Once the budget is approved, it would then head into the fourth step, quotation requests. This would allow the procurement team to forward several requests for quotation (RFQ), to receive and compare bids to shortlist the perfect vendor.
When the vendor is finally selected, the contract negotiation and signings are completed, the purchase order is then forwarded to the vendor.
Next, the company would receive the goods or services within the timeframe, from the vendor. If any problems arise, the purchase examiner would notify the vendor.
After this, the three-way matching which includes purchase orders, packaging slips, and vendor invoices, are lined up and matched to ensure the transaction is accurate.
Once that step is completed, the approved invoice payment is forward to the payment processing department.
The ninth and final step would entail record keeping. All appropriate documents from purchase requests to approved invoices would be stored in a centralized location.