Procurement is the process of acquiring goods or services from external suppliers. Procurement typically involves identifying what is needed, requesting proposals from potential suppliers, evaluating the proposals, and selecting a supplier. The goal of procurement is to obtain goods or services at the best possible price, while ensuring that they meet the required quality standards and delivery schedule.
Companies that specialise in procurement are organisations that help other companies acquire goods and services from external suppliers. They typically provide a range of services to their clients, including sourcing and identifying potential suppliers, negotiating contracts and pricing, managing the procurement process, and overseeing the delivery and quality of the goods or services purchased.
The main goal of a procurement company is to help its clients obtain the goods and services they need at the best possible price, while ensuring that they meet the required quality standards and delivery schedule. Procurement companies often have access to a wide network of suppliers and can leverage their expertise and experience to help their clients make more informed purchasing decisions.
Stages of procurement
- Identify the need: This involves identifying the goods or services that are required and defining the specifications for those goods or services.
- Planning: This involves developing a procurement plan that outlines the procurement process and timeline, as well as identifying potential suppliers and evaluating their capabilities.
- Solicitation: This involves issuing a request for proposal (RFP) or request for quotation (RFQ) to potential suppliers, inviting them to submit a proposal or quote for the goods or services being procured.
- Evaluation: This involves reviewing the proposals or quotes received from suppliers and evaluating them based on predetermined criteria.
- Selection: This involves selecting a supplier based on the evaluation process.
- Contract negotiation: This involves negotiating the terms and conditions of the contract with the selected supplier.
- Contract award: This involves awarding the contract to the selected supplier and issuing a purchase order.
- Delivery and acceptance: This involves the supplier delivering the goods or services and the purchaser accepting them.
- Payment: This involves the purchaser paying the supplier for the goods or services.
- Closeout: This involves completing any remaining administrative tasks and closing the procurement process.
Video explanation of procurement
Companies that offer procurement services