Procurement Process Analysis

The Procurement Process can be divided into the following steps:

1. Identify a Need for Product or Service

The procurement process begins with identifying or anticipating a material, product or service needed by a user in the organisation, which will become the buyer. In the case of smaller organisations or if the purchase requisition requests an item which is a very small rand amount, the purchase order system may allow the user to purchase the item with no huge sourcing process or approval required. The approval might happen through a system such as an e-procurement system, online catalogue, or with a purchasing card. In cases when the rand amount exceeds the users’ permission to generate a purchase order, the purchase must then go through

Sourcing, also known as procurement, is the proactive management of a supply market to ensure access to adequate resources required for the long term needs of the firm: understand market characteristics, identify relevant potential suppliers, define a strategy for the firm, and set the objectives for any market shaping effort. Thus, sourcing is the practice of locating and selecting businesses or individuals based on set criteria. In business sourcing is carried out in many different areas and for different reasons.

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Sourcing frames the agreement with the suppliers involved in the strategy, without necessarily going into the details of the contract. Sourcing teams include elements internal and external to the firm to reach their objectives, to include the eventual optimization of specifications in coordination with production, engineering, marketing, and / or research. Sourcing is the strategic management of external resources. Businesses that can find the most appropriate suppliers at the lowest cost can develop a competitive

Historically, preparing and managing the proper purchasing documents has been a time-consuming process. Most companies have streamlined the document flow process to reduce the paperwork and handling required for each purchase. The suite of tools used to achieve efficiency in purchasing transactions is broadly defined as “e-procurement”. Companies are using e-procurement tools to manage the flow of documents by (1) automating the document generation process and (2) electronically transmitting purchase documents to suppliers. The benefits of electronically generating and transmitting purchasing-related documents