For the uninitiated business owner, the procurement process can appear to be a simple, basic

procedure.

Locate needed goods. Pay. Receive purchased goods. Document transaction.

But like all important (integral!) business functions, procurement is a layered, fluid business process with
multiple moving parts; there are numerous stages in the procurement process.

Procurement is so dynamic, in fact, that it requires constant analysis and monitoring by purchaser or a
purchasing department within an organization. There is always more to know, more data to analyze,
more forecasts to produce — all such responsibilities rest with procurement.

So…what are the stages in the procurement process? What are those constantly evolving pieces in
procurement?

Stages in the Procurement Process

As one learns more about the procurement realm, it becomes glaringly obvious that
each of the writers, theorists and consulting firms involved in procurement has a
slightly different take on the stages in the procurement process.

With that in mind, our friends at the Chartered Institute of Purchasing and
Supply and Business Dictionary have cobbled together a solid list of the critical stages
in the procurement process:

Step 1: Need Recognition – This is a seemingly obvious step, but one that needs to
be mentioned. A business owner (or procurement department) must recognize a
product is needed in order to purchase it. That product can be either a brand new
item, or one that is being re-ordered.

Step 2: Specific Need – Does your industry have specific requirements for various
products? If that is the case in your industry, be sure you are up-to-date on those
requirements and order accordingly.
Step 3: Source/Examine Supplier Options – Every business needs to determine
where to get their goods. Some companies have an approved vendor’s list that have
gone through the Purchaser’s selection criteria and contract negotiations while other
companies are still trying to determine who the best suppliers are. Once a supplier is
chosen, companies should stick with that relationship and try to establish the best
value, get the right price, and save time on their procurement activities.

Step 4: Price and Terms – Once a supplier is chosen, companies should stick with
that relationship and try to establish the best price and specific terms (i.e. delivery).

Step 5: Purchase Order – The purchase order is a formal contract used to buy the
product. The purchase order outlines the price, specifications and terms and
conditions of the product or service and any other additional obligations.

Step 6: Delivery – The transfer of the purchase order via email, mail or fax (email is
highly recommended).

Step 7: Expediting – This stage addresses the timeliness of the service or materials
delivered. Delays, for many businesses, are important. The purchase order will have
expected delivery date information.

Step 8: Receipt and Inspection – Once delivered, the receiving company inspect and,
subsequently, accepts or rejects the product. Rejection is almost always due to a
damaged product.

Step 9: Invoice Approval and Payment – At this stage, three documents must match
when the vendor wants payment – the invoice, the receiving document (attached to
the product) and the original purchase order. This is known as three-way matching. If
there is a discrepancy, it must be resolved before payment is made.

Step 10: Record Keeping – The receiving (buying) company must keep good records.
This means saving all relevant documents for every completed purchase.

How Can E-Procurement Help?

An e-procurement solution can be a significant source of help in various stages of the
procurement process. For instance, an e-procurement solution will electronically
generate purchase orders, with all of the requisite information and can help with
supplier management.

Also, an e-procurement solution is a critical tool when it comes to delivery and

record keeping. With an e-procurement solution, all purchase orders will be sent
electronically in the system (an email notifying all parties will be sent as well),
ensuring delivery is completed immediately.

Finally, an e-procurement solution will catalogue every transaction in the system,

ensuring your records are kept up-to-date. Those records are of critical importance
for financial forecasting, or in the event of an audit.

The benefits of an e-procurement system like Procurify extend to each stage of the
procurement process. Stream line your purchasing and procurement processes,
reduce employee headaches, eliminate annoying paperwork.