Utilizing a proper procurement procedure is vital to all companies and businesses a success which involves seven key stages with several methods to benefit organization’s financial budgeting. Good practice of procurement process can be achieved by performing a supply market analysis to recognize market competitiveness and characteristics, advantages from suppliers, delivery times, and generates reasonable pricing for specific goods or services to the company. This article explains the key stages of the typical procurement process.
Requisition for Purchases
A purchase requisition is something like a request form for the internal employee within the organization uses to request the purchase of goods or services to the procurement team. In general purchasing process needs to be reviewed and granted approval for internal permission before the sourcing. Once a requisition is approved, purchase orders can be requested for the internal accounting system and expedite record-keeping and sent to the vendor. A purchase order requires certain information like the order number, name of the purchasing office, payment terms, items to be purchased, & ship to address to trace the exchange of goods and services. When the goods or services are delivered by the supplier, the receiving team checks the order for quantity and quality, the purchase order number, packaging slip or order receipt, and invoice to confirm the accuracy of the purchase order. This ensures that the finance or accounting department is paying only for the items that they have ordered and received, and without any discrepancies.
Sourcing for Suppliers
The sourcing process is central to cost structuring, profit margins, and competitiveness for businesses of all sizes. It’s important to possess a business partner which needs to be someone who can intact and someone who can trust now and in the future. By selecting the right suppliers there will need to be considered as the quality of the product, price offers, and lead time of the purchase of goods or services from suppliers. Sourcing strategic benefits to both buyers and suppliers. Purchasers can negotiate lower unit pricing for high-volume purchasing which reduces the company’s costs of goods and keeps retail prices competitive. Suppliers can have the outlet of their goods consistently which makes dependently on cash flow planning.