On the face of it, the procurement process can appear to be relatively straightforward.
Buyers need services; they find suppliers who can deliver those services they pay them to deliver the services – and the transaction is over.
The reality is slightly more complicated, as the procurement process is multilayered with many moving parts. However, using an e-procurement solution such as Delta can automate a number of these processes which simplifies the process dramatically. This can be extremely beneficial to your organisation in a number of ways, including streamlining purchasing, successfully tendering and controlling spend.
Before you get started, it’s important to know the basics; here are our four steps explaining the procurement process:
1 – Identifying need
The procurement process always starts with the same component – need.
An organisation recognises the need to procure goods, products or services and prepares the business case to do so. Once this need has been recognised, the organisation then identifies exactly what their requirements are. These requirements are then written up in a Contract Notice, which is published inviting suppliers to tender.
2 – Supplier evaluation and selection
Once the Contract Notice has been published and suppliers have applied to tender, the buyer must then examine the applications and identify a long list of potential suppliers, which will ultimately end up as a shortlist of three, which the winner will come from.
There is no one way to evaluate suppliers, and buyers will select their preferred candidates based on the requirements of each individual project. However, the objective is always to reduce risk and maximise value to the buying organisation.
3 – Purchase order
As well as negotiating the best price for the goods, products or services which are to be procured, organisations must spend time reviewing the terms of the contract and making sure they are getting the best deal available.
Once these terms have been agreed with the supplier, they will be written up in a formal contract called the Purchase Order, which will outline the deliverables including price, specification and terms and conditions of the product or service as well as any additional obligations.
4 – Delivery
Once the terms have been agreed and the Purchase Order is signed, the next step is the delivery of the services or products based on the specifics which have been agreed.
Once the goods are received, the buyer will reconcile the goods with the Purchase Order before payment is made. Was the project delivered on time? Are the products or services which were delivered those that were agreed on in the Purchase Order? If there are no problems with the delivery, and the buyer is happy with the goods received, payment will be made.