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Procurement

Procurement is a strategic process for acquiring goods and services, essential for cost control and risk management. The core procurement lifecycle includes stages such as need identification, supplier sourcing, evaluation, negotiation, purchase order fulfillment, invoice processing, and record keeping. Each stage involves specific activities to ensure effective supplier management and resource acquisition.

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3 views1 page

Procurement

Procurement is a strategic process for acquiring goods and services, essential for cost control and risk management. The core procurement lifecycle includes stages such as need identification, supplier sourcing, evaluation, negotiation, purchase order fulfillment, invoice processing, and record keeping. Each stage involves specific activities to ensure effective supplier management and resource acquisition.

Uploaded by

aman.jailany123
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

Procurement is the complete process an organization uses to acquire goods and services from

external sources. It is a strategic function, far beyond just "buying things," and is essential for
controlling costs, managing risks, and ensuring a smooth supply of resources .

🔄 The Core Procurement Lifecycle


A standard procurement cycle follows a series of logical steps that guide an organization from
recognizing a need to paying for a purchase and managing the supplier relationship .

Stage Description Key Activities


1. Need The process begins when a Defining specifications, quantity, timeline,
Identification department identifies a and budget; raising a formal internal
requirement for goods or purchase requisition.
services.
2. Supplier Finding potential vendors Market research, issuing Requests for
Sourcing who can meet the identified Information (RFI), and building a list of
need. qualified suppliers.
3. Supplier Evaluating potential suppliers Comparing proposals (RFx: RFP, RFQ),
Evaluation & based on pre-defined criteria analyzing cost, quality, financial stability,
Selection to choose the best fit. and references; often using a formal scoring
system.
4. Negotiation & Finalizing the commercial Negotiating price, delivery terms, payment
Contracting and legal terms of the schedules, service levels; signing a contract
agreement with the chosen or issuing a final purchase order.
supplier.
5. Purchase Order Issuing a formal, binding Sending the PO; coordinating delivery,
& Fulfillment purchase order to the supplier receiving goods, inspecting them for quality
and managing the delivery. and accuracy against the order.
6. Invoice & Processing the supplier's Performing "three-way matching"
Payment invoice and making payment (comparing PO, goods receipt, and invoice)
upon satisfactory delivery. to ensure accuracy; processing payment.
7. Record Keeping Finalizing documentation and Archiving all documents for audit; tracking
& Supplier evaluating the supplier's supplier performance (e.g., on-time
Management performance over time. delivery, quality); managing the ongoing
relationship for future purchases.

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