What is Procurement?
Procurement is the process of strategic sourcing of goods and services for an organization. The goal of procurement is not only to complete a purchase but also to ensure that the goods or services are delivered on time, at par with the expected quality, and obtained at the best possible price.
What is a Procurement Checklist?
A procurement checklist is a tool used by procurement officers to help ensure that all procurement requirements and steps are met to prevent delays or rejection of the purchase of supplies or services.
5 Main Steps in Procurement
Procurement processes may differ depending on the preference and needs of the organization, but it generally involves these 5 steps.
- Needs identification – An organization has specific needs before it can operate. Once these needs are identified, the authorizing body reviews and approves the method of sourcing and proposed budget.
- Documents preparation – Procurement involves sourcing of supplies, including what documents to prepare such as request for proposal, cost estimate, bid advertisement, etc.
- Sourcing – Depending on the organization, procurement usually involves bidding as a method to obtain supplies or services at competitive prices. The organization may also opt to source from its list of suppliers or, in the case of government procurement, inquire from other government units for their trusted suppliers.
- Contract awarding – Once a supplier is established, a contract is awarded with the agreed upon terms and conditions.
- Recordkeeping – It is vital to maintain all the documents involved in procurement to prepare for possible internal auditing of the procurement process as well as the goods and services acquired. Proper recordkeeping can also help for easy reference in the future.
3 Considerations in the Procurement Process
Regardless of the procurement procedure followed by an organization, there are 3 main considerations across the industry:
1. Authorizing body
The authorizing staff or departments responsible for purchasing, contracts, internal auditing, quality assurance, etc. need to be identified to promote a smoother procurement process. Using a procurement checklist can help reinforce familiarity with the authorizing bodies and avoid rejection or any delays in procurement.
Once prospective suppliers are identified, they are sent a request for proposal and are invited to join a competitive bidding. Competitive bidding is encouraged in order to get the best deals. Suppliers can also be audited to encourage consistency in quality and compliance with regulations.
3. Compliance and consistency
The goods received from the supplier should be audited to ensure that the quantity and quality are according to the agreed upon specifications. Timely delivery of goods and services should also be considered.