Explain the different steps in the procurement process in terms of their triggers, required data, tasks completed, and outcomes.
The correct answer and explanation is:
Procurement Process Steps: Triggers, Required Data, Tasks, and Outcomes
1. Identifying Needs
- Trigger: Business requirement for goods or services.
- Required Data: Internal demand forecasts, inventory levels, or specific project requirements.
- Tasks Completed: Analyze requirements, define specifications, and confirm approval.
- Outcome: A documented procurement request or requisition.
2. Purchase Requisition
- Trigger: Identification of needs by departments.
- Required Data: Specifications, quantity, delivery timelines, and estimated costs.
- Tasks Completed: Creation of a requisition form and management approval.
- Outcome: Approved purchase requisition ready for procurement team action.
3. Supplier Identification and Selection
- Trigger: Receipt of an approved purchase requisition.
- Required Data: Vendor databases, past supplier performance, and request for proposal (RFP) documents.
- Tasks Completed: Evaluate vendors, request quotes, and compare offers.
- Outcome: Selection of a suitable supplier and agreement on terms.
4. Purchase Order (PO) Creation
- Trigger: Selection of a supplier and agreed-upon terms.
- Required Data: Supplier details, agreed terms, item specifications, and payment terms.
- Tasks Completed: Generate and send the PO to the supplier.
- Outcome: Issued PO as a formal order for goods or services.
5. Receipt of Goods or Services
- Trigger: Delivery of ordered items by the supplier.
- Required Data: PO details, delivery receipt, and quality check reports.
- Tasks Completed: Inspect goods, verify quantity and quality, and document receipt.
- Outcome: Goods or services accepted into inventory or operation.
6. Invoice Processing and Payment
- Trigger: Receipt of an invoice from the supplier.
- Required Data: Invoice, PO, and delivery confirmation.
- Tasks Completed: Match invoice to PO and delivery, approve payment, and process through finance.
- Outcome: Payment made to the supplier.
7. Recordkeeping and Audit
- Trigger: Completion of procurement and payment processes.
- Required Data: Procurement records and documentation.
- Tasks Completed: Archive documents for compliance and review performance.
- Outcome: Auditable procurement records for future reference.
This structured procurement process ensures efficiency, compliance, and cost control in organizational purchasing.