A procurement process is a path from proposal to delivery of the purchased product or service, beginning with the inquiry stage and concluding with delivery. It includes a series of interrelated steps that the purchaser undertakes at each step to successfully obtain the purchased goods or services and deliver them on time to the customers. In addition, a procurement process is an important consideration in the strategic management of purchasing activities to ensure that purchases are made at the lowest cost and with maximum efficiency.
The procurement journey represents the order value or quantity needed, the time and manner in which orders are received, and the type of offers made to have you got approval from the relevant person as a potential purchaser. Procurement results from planning, negotiating and agreeing upon an agreed price and terms and conditions. We call this a “procurement process” because all of these activities happen throughout the supply chain. The process starts from the supplier or manufacturer, through the dealer or sales force, to the wholesaler or distributor, and finally to the end-user.
On receipt of quotations, suppliers need to conduct their due diligence to identify customers’ key purchase essential requirements. They need to understand the primary sources of supply, the current market situation and competition, customer preferences, the key risks and rewards, the expected impact on the balance sheet, and other factors. In other words, suppliers need to conduct a detailed analysis of the requirements and the current supply to understand customers’ critical needs.
Once suppliers have developed a feasible solution, they will need to enter into direct discussions with the customers and present their offers. These discussions are often very fruitful and mutually beneficial since both parties can understand the scope of the requirement and work out a reasonable solution. When entering into buyer contracts, the primary aim is to get the lowest price; however, due to the risks associated with the selected vendor and the fact that it may not be feasible to implement, it may be beneficial to secure a partial market share at a fixed price through procurement journey routes.
Procurement processes are a critical part of any business’s success, and identifying the right vendors can help increase the company’s profitability and reduce operating costs. With the ever-changing technologies and strategic priorities, it is important for companies to stay on top of all the requisite documentation and communicate regularly with their suppliers. Procurement documentation and communication are key to any business’s success, and companies should focus their efforts on providing tailored solutions to their customers.