An Overview of the Procurement Process

One of the biggest challenges for businesses and government agencies is to find vendors to work with.

You need to have a procurement process in place in order to make the succession a smooth one. The problem is that there are so many different stakeholders, it’s hard to get organized and make the system a smooth one.

When you understand the scope of the procurement process, you’ll be able to develop your own internal system that makes the process much easier.

Read on to learn about the steps in the procurement process.

1. Gather Your Stakeholders

The vendor that you choose is likely to impact many departments. If you see a need within your company, your first step is to gather your stakeholders together.

You’ll outline your needs and prioritize what you want from a vendor. You also want to outline the scope of the project and the budget of the project.

2. Get Approval

There is someone higher up the chain in your company that’s responsible for the financials. Odds are that there is someone who needs to approve the expenditure.

You’ll have to explain why you need to have this approved and how it will help the company’s bottom line.

3. Send Out RFPs

You’ll have to gather your stakeholders again and create an RFP. This is a long document that vendors fill out that gives you the best indication of the costs and the company bidding on the project.

You have to decide on what to include in the RFP, the important questions that need to be answered, and then send out the RFP.

4. Review the RFPs

After a period of time, you’ll have a stack of RFPs to go through. You’ll need to review each one. You may contact a handful of companies to come in and present their proposals in person.

5. Settle on a Vendor

After a long deliberation between all of the stakeholders, you’ll settle on one vendor to work with. You’ll need to work with the vendor and negotiate a contract.

Once everything is approved, a purchase order is submitted and approved. You can tell that there are a lot of moving parts to keep track of, which is where a purchasing and management system can be useful.

6. Receive Services and Pay Vendor

The final step in the procurement process should be simple. This is where the vendor delivers on the contract and you pay the vendor.

This isn’t as easy as it seems, because you still have to manage the vendor to make sure they deliver. You also have to communicate with accounting to make sure the check gets cut. You don’t want to ruin a vendor relationship because a payment was late.

The Procurement Process is Complex

If you are in a large company and you have a glaring need, you can’t just hire someone off the bat to fix it.

There is a long procurement process, which follows a chain of command to make sure that each department’s needs are met, and the vendor is below budget. It can be frustrating, but with the right systems in place, the process can be made manageable.

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