What is the Procurement Process Flow?

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What is a procurement process flow? Glad you asked!

The procurement process flow is the skeletal framework that outlines how purchasing and procurement occurs or is handled within an organization. Generally, the purpose of understanding a procurement process flow is to analyze and improve business practices (in particular, the procurement and purchasing process).

Without a detailed understanding of the procurement process within an organization, it becomes difficult to develop a much-needed hierarchy of purchasing and approving.

The first step in the procurement process flow begins with a request for procurement. Depending on how your organization chooses to conduct their purchasing process, this step can either be done electronically, handwritten, or via the phone (electronically is highly recommended).

The buyer is sent a notice for a request for purchase, which prompts the buyer to create a purchase order for the item, or, in some cases, to reject the purchase requisition completely.

After a manager (or whomever is designated) has approved a purchase requisition and created a purchase order, the buyer sends a budget request to the accounting department. Once the accounting department has approved a budget, the buyer can then send out multiple requests for quotation (RFQ) to potential suppliers. The purpose of sending out multiple RFQs is to compare supplier bids. Normally, this is used for products that have not been procured before (products that your organization buys regularly are generally made from pre-established suppliers).

The procurement process flow, thus far, has been quite standard. And the benefits of visualizing the procurement process increases your awareness of who can approve what, as well as where potential problems might be occurring.

After the RFQs have been received and analyzed, the next step would involve negotiation and, finally, conclusion of contract. Methods of payment can be different depending on the company you are dealing with. Normally, payment is provided after arrival of products.

 

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Michael Fournier

Michael Fournier is a Brand Manager at Procurify whom focuses on bringing the most relevant topics regarding supply chain management and eProcurement to light. When Michael isn't writing blog posts or working on campaigns he enjoys a nice cup of coffee. And Michael enjoys his coffee like his shirts, pressed.

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