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An Overview of Enterprise Procurement

The term “procurement” is a familiar jargon for anyone who has any experience working for a large company / organization. Broadly speaking, it is the process of procuring goods and services for a company and/or an organization. Procurement process typically includes planning for the procurement of goods and services for the company’s operational needs as well as raw materials. And also as a way to assess vendor performance.

The Procurement Department

The procurement process is carried out by the procurement department in a company / organization that has the following responsibilities:

1. Planning

When planning the purchase or procurement of goods and services, the procurement staff must make specifications for the goods and services the company needs. In addition, procurement staff must also ensure that the goods and services to be ordered are of the required quality and specification needed by the company / organization. In this process, it helps if requirements are provided in as much detail as possible.

2. Sourcing for Supplier

After procurement planning, the procurement department needs to source a supplier who can meet the company’s needs. The company / organization needs to source as many suppliers as they could, so that they can receive the best offer from the suppliers. At this stage, the procurement department will make sure that each supplier can provide a guarantee to the availability of goods or services, quality, and price so as to qualify for the next step.

3. Tender and Negotiation Process

At this stage, the procurement department begins the tender process by letting suppliers enter their bids. The procurement department then has an option to negotiate on pricing to suppliers or vendors. The goal is to select and award a supplier which can provide the best balance of price and quality.

4. Supplier Awarding

After finding a suitable supplier or vendor, the next task for the procurement staff is to award the tender to a winning supplier and prepare documentations for moving forward.

5. Availability of goods and services

After the purchase of goods and services is made, the procurement department needs to carry out continuous stock and quality control. This is intended so that there is no shortage or decrease in the quality of goods and services that can affect company productivity.

6. Vendor supervision

Finally, the procurement department is also responsible in reviewing and keeping track of supplier performance so that the company / organization is able to procure the goods as agreed, and also as a way to maintain a healthy business relationship with the supplier

The General Procurement process

The following illustrates a typical procurement process in a company / organization:

Requirement Determination

Is the initial stage of the procurement process. After determining what goods and services are needed by each department, the company / organization will create a purchase requisition document. The request list is given to the relevant department or department for further procedures. 

Source Determination

After obtaining the purchase requisition documents from all departments, the procurement department looks for eligible suppliers who can fulfil the request. At this stage the procurement department will issue a Request for Quotation / Request for Proposal document for the suppliers.

Supplier Selection

From the list of vendors compiled by the procurement department, one or more suppliers are selected according to the company’s criteria. The selection of vendors is based on the consideration of the availability of goods and services according to the company’s needs, quality, and price offered.

Order Processing and Purchase Order Monitoring

The next stage is to create a purchase order document to the seller that was appointed as the awardee of the tender. At this stage, the procurement department is also tasked with monitoring the purchasing process so that it runs smoothly and accordingly,

Goods Receipt

Suppliers who have delivered the goods and services according to the Purchase Order document then have to submit goods receipt as a proof that goods and services have been received by the purchaser.

Payment

After the goods are received, the financial department of the ordering company or the procurement actor then makes payments according to the agreement agreed by both parties at the beginning of the cooperation.

What happens if the supplier delivers faulty goods? In this case, returns or returns and replacements of goods are carried out according to the agreement stated in the cooperation document.

e-Procurement, Modern Procurement Process with Many Benefits

E-Procurement is the process of procuring goods or services that take advantage of software facilities, communication technology and information. Procurement transactions using E-procurement are easier, more transparent and efficient than traditional procurement processes.

According to Dave Chaffey, Digital Marketing (2009), e-Procurement is an electronic integration in the management of all procurement activities. This includes purchases, requests, order authorizations, deliveries, and payments between buyers and vendors.

Benefits of e-Procurement for Business

The presence of e-Procurement certainly has a good impact on the progress of the company. Here are the benefits of e-Procurement for your business:

Neater Data Input

In the procurement process, a lot of data will be generated. The problem is, manual storage allows these data to be at risk of loss or corruption. If you do an e-Procurement transaction, this problem can be resolved properly. Because all data is neatly stored in cloud storage and can be opened whenever you need.

Monitored Delivery Process

In a manual procurement transaction, you must monitor the shipments to arrive at the company address. The e-Procurement system will make it easier for you to monitor shipments.

More organized

E-Procurement makes the data collection process as well as the procurement process automatic and more orderly. The report preparation process is also easier, tidier, faster and more transparent.

Can Be Selected As Needed

The e-Procurement application can be customized according to the needs and business processes that exist within each organization.

The Advantages of E-Procurement Than Procurement

Following are the advantages of procurement using the E-Procurement system:

  • The transaction process is easier and faster.
  • Delivery of goods or services on time and to the right place.
  • Monitored order tracking process.
  • Quality and quantity of goods in accordance with the order.
  • Shorten transaction time because it cuts multiple processes.
  • Transactions more safely, fairly, honestly and transparently.
  • Preparation of procurement reports that are more accurate and faster.

Based on the above reviews, conclusions can be drawn. E-Procurement is a new style of corporate procurement system for better company performance.