Procurement Processes and Stages

Procurement

• Procurement focuses on sourcing, managing, and disposing of goods and services from external sources.

• The key stages in Procurement are:

  • Navigation: Identifying needs and market opportunities.
  • Vendor Selection: Choosing the best suppliers.
  • Establishing Payment Terms: Setting up financial agreements.
  • Strategy Development: Managing vendor relationships strategically.

Procurement Stages

• Sourcing: Identifying needs, creating purchase requirements, and assessing vendors
• Purchasing: Negotiating terms, creating orders, receiving, and inspecting goods or services
• Payment: Conducting three-way matching, approving invoices, arranging payments, and keeping records

Procurement Functions

• Strategic: Need identification, specification of requirements, market research & supplier sourcing, supplier evaluation & selection, contract terms negotiation, and supplier awarding
• Transactional: Purchase request, purchase order, dispatch of products, reception and storage of goods & services, physical inspection of goods, inspection of documents, and supplier payment
• Supportive: Department policies definition, vendor rating, supplier performance monitoring, training & development, contracts management, and supplier relationship management

Supplier Relationships

• Arm's Length: Transactional and short-term, focused on price and terms without long-term commitment
• Cooperative: Moderate term, involves working together to meet mutual goals, often involves trust and shared information
• Collaboration: More engaged and strategic, involves sharing resources and knowledge to improve processes and outcomes
• Partnership: Long-term and strategic, deep mutual commitment and shared objectives

Benefits of Partnerships

• Not mentioned in the provided text.

Procurement

• Procurement involves optimizing, managing, and disposing of goods or services for an organization from external sources.
• Procurement is a broader function that includes purchasing.

Stages of Procurement

• Sourcing Stage: Identifying needs, creating purchase requirements, and assessing vendors.
• Purchasing Stage: Negotiating terms, creating orders, receiving and inspecting goods and services.
• Payment Stage: Performing three-way matching, approving invoices, arranging payments, and keeping payment records.

Procurement Functions

• Strategic: Need identification, specification of requirements, market research & supplier sourcing, supplier evaluation & selection, contract terms negotiation, and supplier awarding.
• Transactional: Purchase Request (PR), Purchase Order (PO), dispatch of products, reception & storage, goods physical inspection, documents inspection (three-way match).
• Supportive: Department policies definition, vendor rating, supplier performance monitoring, training and development, contracts management, supplier relationship management.

Supplier Relationships

• Arm’s Length: Transactional and short-term, focused on price and terms without long-term commitment.
• Cooperative: Moderate term, involves working together to meet mutual goals, often involving trust and shared information.
• Collaboration: More engaged and strategic, involves sharing resources and knowledge to improve processes and outcomes.
• Partnership: Long-term and strategic, deep mutual commitment and shared objectives.

This quiz covers the fundamental aspects of procurement, including sourcing, vendor selection, and payment processes. Explore the key stages and functions of procurement that ensure effective management of goods and services. Test your knowledge on strategic and transactional elements involved in procurement.