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The 7 key steps of a procurement process

Moritz Ruck
Moritz Ruck18.12.2020 4 min

Table of contents

  1. Quick Overview
  2. What is Procurement?
  3. The 7 Procurement Steps in Supply Chain Management
  4. Benefits of Procurement in Supply Chain Management

Supply chain procurement is a crucial process to ensure that businesses are optimizing their transportation. The steps of procurement are all about adding value to your business endeavours and optimize bulky processes into streamlined and lean ones. If you take all of the steps that we will talk about later on, you ensure you have the suppliers that match your needs best, be able to track their transportation progress using apps such as the IMPARGO ShipperPortal, measure their performance quality, and many other benefits. These benefits are all adding value to the transportation process of every business. Before we get into those steps and their benefits though, let’s talk about what procurement is.

What is Procurement?

Procurement is the series of steps that an organization takes to obtain goods or services to accomplish their goals. In the supply chain, this is critically important as costly unexpected delays are occurring daily and businesses have to have a plan in place to adapt to their ever changing day-to-day operations. Procurement ensures that businesses are optimizing themselves, and connecting themselves with the best suppliers for the best price that they can get. So, now let’s take a look at what those steps can do for your business.

The 7 Procurement Steps in Supply Chain Management

Step 1 - Identify your supply needs: Businesses need to identify what supplies all units of their business need to in order to manufacture their product and conduct their services. They need to be sure they are covering all possible avenues of any supply needs they have to ensure they are not missing resources later on down the road.

Step 2 - Find potential suppliers: Conduct research on suppliers that can fulfill your supply needs. When searching for suppliers, choosing the correct partners can be crucial in finding ways to cut costs. Finally, do research on those suppliers and look at their customer reviews to see if they are a business you want to partner with. Remember price is not always the most important thing, level of service is crucial in an area such as supply chain management. Delays are very common in this area of business, and it is critical that they are handled quickly and efficiently to eliminate potential loss of sales to customers.

Step 3 - Negotiate contracts with suppliers: Construct contracts with suppliers that make clear pricing, volume of work, and delivery timelines expectations. Make sure these expectations are explicitly clear, and state that if they are not met routinely, then you have grounds to terminate the contract.

Step 4 - Develop a purchase requisition and release purchase order: This requisition will state the supplies being shipped, quantity, carrier information, supplier information, and transportation expectations. This will make it clear to all parties what is being transported, at what cost, and serves as a reminder of delivery expectations.

Step 5 - Release the purchase order: This purchase order will be dispatched to the supplier, where they will begin to start to assemble the order based on the purchase requisition.

Step 6 - Complete payment: The supplier will then invoice you based off of the quantity and type of supplies being ordered via the purchase requisition. They will assemble the order for you, and you will complete the payment process through the invoice.

Step 7 - Audit the delivery: The order will be shipped by the supplier to you. Then upon delivery, you will ensure that what is contained in the delivered order matches what was in the purchase order. Additionally, here you can ensure that supplier expectations were met such as delivery time and the supplies are undamaged.

Benefits of a defined Procurement Process in your Supply Chain

These procurement steps will ensure that the supply chain procurement process runs smoothly from start to finish as long as they are done correctly. It is well advised to request visibility from the suppliers to ensure that the process is running smoothly from start to finish. They then will be able to ensure that suppliers are manufacturing their products to the quality and in the time that was communicated by the supplier expectations. Additionally, having end-to-end visibility within the shipping process allows for businesses to track the progress of their delivery from the suppliers. You can do this too by utilizing the IMPARGO ShipperPortal.

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