7 Key Steps Of A Procurement Process

Most organizations find maintaining service and product quality pretty challenging. However, the process of procurement makes it easier to tackle that challenge to guarantee efficient business operations.

Procurement refers to organizations’ steps when obtaining goods and services to accomplish their organizational goals. A solid procurement process can help minimize costs, reduce risks of failure, and improve supplier performance by minimizing delivery times. It also allows you to choose the vendors to work with and track the transportation progress of goods in transit.

The nature of a procurement process and procurement success depends on the type and size of a business. The outline below highlights the key steps of a procurement process:

1. Know The Organizational Needs

It’s crucial to assess the organization’s current performance and identify its requirements to meet its goals and demands. You’ll have to collect a lot of data to know the appropriate needs of every department in your organization.

You can start by communicating with each department, analysing workflows, and gathering customer feedback to assess its operations and predict future growth. Moreover, you can acquire the sensibility of your organization’s spending, allowing you to cut costs and save money by creating a reasonable budget for the procurement process.

2. Find Potential Suppliers

It’s crucial to get the appropriate suppliers to fulfil your supply needs. Failure to do that can make your organization suffer losses by either paying more than you should or experiencing delayed deliveries, slowing down your business operations.

Therefore, it’d be wise to check the potential suppliers’ profiles or portfolios to see how they transact their businesses. You can also look at customer reviews to learn about their previous experiences with other customers. A professional supplier would also know the terms used in procurement such as the difference between EOI (Expression of Interest) and RFP (Request for Proposal).

Some ideal traits worth considering when looking for a supplier include accountability, ease of communication, timely deliveries, ethics, and prioritizing building relationships. As a wise tip, it’s crucial to consider your supplier’s level of service rather than price to avoid delays. You can also select multiple suppliers to create competition, avoiding supply disruptions.

3. Negotiate Contract Terms

After deciding which supplier to work with, you’ll have to negotiate the contract terms with them. You have to agree on fair prices that both parties can happily work with. You also have to consider delivery timelines, terms, and conditions when negotiating contract terms.

It’s crucial to keep a copy of the contract for easy reference in case anything goes below the standards you set, giving you grounds to terminate the contract. You can also analyse your previous contracts to know where to streamline costs to save money and how to create more realistic contracts.

4. Develop And Release A Purchase Order

A purchase order is a document that outlines the description of goods, quantity, total costs, transportation expectations, supplier information, and carrier information. This document clarifies what’s in transit, its cost, and delivery expectations to both parties. Approving the purchase order through a platform like Coupa’s PO management software signals your finance team to release its details to the supplier, giving them access to details like the reference number, payment terms, and any other relevant information.

5. Process Payment

The supplier then offers you an invoice detailing agreed prices and instructions regarding payment. It’s crucial to keep a record of the invoice for future reference. Depending on your contract terms, you’ll have a certain period to make the payment, mostly 30 days for credit payments.

It’d be wise to pay your invoice after receiving it as it’d save you from forgetting or incurring additional costs for late payments. Moreover, timely payments can create a good rapport between both parties and can be beneficial; in some instances, your supplier can include extra products at little or no cost for your loyalty.

6. Delivery And Audit

Your supplier would then deliver your products. It’s crucial to check if the products you receive match those in the purchase order or if something’s missing. You need to contact your supplier if there’s a supply missing to rectify the issue, reducing possible downtime. Counterchecking also ensures that the supplier sticks to the delivery times and that products aren’t damaged.

7. Have A Turnaround Strategy

It’s crucial to develop an evaluation system based on key performance indicators, especially when working with new vendors. Therefore, you need an extensive list of providers with the best services to offer you a plan for changing vendors if something goes wrong with your supplier.


Organizations need effective procurement of goods and services to be relevant and competitive, as well as bring optimum value to the company. Following the basic steps above would aid in implementing a viable procurement process.