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CHAPTER 1
PRINCIPLES OF SUPPLY CHAIN AND PROCUREMENT MANAGEMENT
1.11 THE PROCUREMENT PROCESS
Each individual involved in the procurement of goods and services goes through
a process before making the final decision of which products and services to
procure, from whom to procure them, how much to pay and why it is necessary
to procure the items. The procurement process differs, depending on whether
procurement officers are buying for projects or are buying products and services.
It is important to note that different people at different levels of management
within the procurement function play different roles during the procurement
process. The stages in the procurement process include:
• Identifying the need
– A need may arise from any function, for example,
production requiring raw materials for production purposes or administrative
departments requiring office furniture for internal use. User functions
sometimes fail to identify needs in time, which could result in urgent needs,
creating challenges for the procurement officers.
• Describing the product or service needed
– As soon as the need for
products and services arises, it is communicated to the procurement function
using the required document, such as a standard purchasing requisition.
The information contained in the requisition includes the date, originating
department, account to be charged, complete description of the material
or service required and quantity, date material or service needed, special
shipping or service delivery instructions as well as the signature of the
authorised requisitioner.
• Searching for potential suppliers
– It is important to have a supply base
from which to source products. In cases where appropriate suppliers are
unavailable, procurement officers assume responsibility for finding potential
suppliers. They also maintain relationships with existing suppliers.
• Evaluating and selecting suppliers
– This is the stage at which procurement
officers select a supplier, whether local or international, small or large.
• Ordering
– Takes place after the negotiation process has been completed
with regard to price, delivery arrangements and product requirements.
• Performance evaluation
– After suppliers have been selected and have
supplied the products, they are evaluated to determine if they are supplying
according to agreement or as stipulated in the contract. Those who supply
satisfactorily stand a chance of receiving additional orders in future, while
those who fail might be removed from the organisation’s supplier database.
Figure 1.2 shows the stages in the procurement process.