The procurement cycle involves identifying a product need, researching options, negotiating with suppliers, receiving delivery, and deciding if more is needed. A department oversees the process, finding the best products at the best prices while considering limitations. Specific procurement procedures must be followed, including security measures in some workplaces.
The procurement cycle is a series of steps involved in the process of acquiring goods for sale or use by a company or agency. It starts with identifying the need for a particular product, moves through the purchase and delivery process, and ends at renewal, where people decide if they need more of the product. Often an entire department oversees this process. This department must find the best products at the best prices, taking into account limitations such as refusals to do business with certain companies or countries in the process of deciding what to buy from where.
When a company identifies a need for a product, it begins the procurement cycle, with information gathering. People research available options to meet the need and collect data on prices, discounts, delivery times and other issues. Once the best possible source is identified, they approach the supplier to enter into contract negotiations. This can be as simple as ordering a few cases of paper from a paper mill or as complicated as negotiating an entirely new computer system for a government agency.
During this part of the procurement cycle, people on both sides work to get you the best deal. The supplier will consider factors such as order size and the likelihood of repeat orders, while the company thinks about issues such as how quickly it needs the product. He can request samples to give him the opportunity to evaluate the quality and compare offers from different suppliers. In the end, he will conclude an agreement with a sales contract and wait for delivery.
After delivery, people use or sell the product, completing the procurement cycle when they face a new product need or project completion and are no longer needed for a particular product. They can discard unused product, return rentals, discard damaged and out-of-stock products, and decide if they should order more. At this point in the procurement cycle, people can ask for feedback from employees and others about how well the product met their needs, to decide whether they want to use the same vendor or approach someone new.
There are usually specific procurement procedures in place at a company. People need to follow through if they want to order new products, from filing the correct inquiry form to making sure someone is available to sign for the product upon delivery. This can be complicated in workplaces with issues such as security issues, where protecting workplace safety may require a few extra steps, such as running background checks on suppliers, during the procurement cycle.
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