Procurement is a business process of purchasing goods and services that involves the identification, evaluation, and authorization of the right vendors who can provide the right products and services at the right cost in the right amount of time.
What is the Procurement Cycle?
A procurement process is designed to define and manage purchasing goods and services. The goal of a procurement lifecycle is to purchase goods and services at the lowest possible cost and in the shortest amount of time, with the highest level of quality and service, and to ensure that such purchases comply with applicable laws, regulations, and corporate policies.
What is the first step in a procurement lifecycle?
The first step in a procurement cycle is needed identification. Need identification is the first step of the procurement cycle because the rest of the process would be useless without it. Need identification is the first step because, without it, the rest of the procurement cycle is useless.
The first step in any acquisition process is determining what you need. The process of determining your need is often complicated, especially when you’re dealing with a recent, unexpected business problem. It’s even harder if you’re not sure what problem you’re trying to solve or if you’re trying to solve multiple problems at once.
In the event that you are a business proprietor, you are certainly in a situation where you are looking for a solution to a problem that is beyond the scope of your personnel and information technology department. Probably, you have reached a point where you have a well-defined problem, but you do not know where to begin.
This is where the need identification step comes in. It is a process of identifying and analyzing existing problems in order to determine what you need. The first step in the need identification process is to identify the problem.
In order to do that, you need to ask yourself a few questions. What is it about your current system that makes you unhappy? How does it affect your business in general? What are you doing today to try and fix the problem, and what kind of results have you been getting? The other processes include:
Selecting Vendor
Selecting a vendor is the most critical task in any procurement cycle. This process is usually a long, arduous and expensive one, even for small purchases. Yet, the choice of the wrong vendor can have a devastating impact on your business.
Purchase Requisition
The first step in a procurement cycle is to submit a purchase requisition, also known as a purchase order. A purchase requisition is a document that requests a vendor to supply a certain product or service. It usually lists the item's name, price, quantity and other specifications.
The requisition is submitted to the purchasing department, where it is reviewed. Once approved, the requisition is sent to an accounts payable department, where payment is authorized and then processed. Generating purchase orders and invoices, and the final step is making the payment.
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