The Basics Of The Procurement Process

In this context, a discussion is on steps Marketing Procurement Consultancy. Firstly, the concept of procurement has to be clear in mind. Every establishment either provides products or services. Factories generally manufacture goods which are the end products. Business process consultancies or any other kind of consultancies provides services. This is the basic work done by the establishments. Now to manufacture a product, there are requirements for other things as well. Let’s understand with an example. For example, there is a shoe factory. The main purpose of a shoe factory is to make the shoes.

Sole is the lower part of shoes, and Leather is the upper part of shoes. To complete the manufacturing of the shoe sole has to be glued with the Leather. Now the company of shoe dies the indenting of the glue from outside from a third party. This process of getting the product from a third party is called procurement.

If there is a restaurant, the restaurant’s basic task is to provide the food and beverage service to its customer coming there. To make the food, the raw material is required. The owner of the restaurant asks the third party to supply the raw material. This process of indenting the raw materials is called procurement.

Steps of procurement

Therefore, the concept of procurement gets clear in both kinds of establishment. Whenever raw material or other services are taken from a third party, a contract is made between both parties. This is known as a memorandum of understanding. Another alternate name is the contract. Multiple things need to be clear and get documented between both parties. Both parties keep a copy of the contract. The agreement can be done for months, years, etc. For example, the restaurant does a contract with a wholesale dealer of vegetables and fruits.

On the agreement, it has to be mentioned that what quantity has to be supplied, the price at which the vegetables and fruits have to be provided, quality of the raw material to be maintained for the mentioned time, how much time will the payment be credited, a vegetable seller. Therefore, these kinds of terms and conditions are mentioned in every contract. It can also be said that it is a kind of mutual understanding between both of them.

These examples are given to clear the concept of procurement for a small establishment. There is another alternate term for a contract, which is called tender. Passing a tender is also part of procurement. However, it is done in bigger establishments. For example, an overbridge needs to be constructed in a city.

Procurement by the government

The government of that particular state will pass the tender to various contractors who do civil engineering work. Civil engineering making the roads, dams, bridges, pools, etc. The government will do an announcement; advertisements will be published. All the methods of publicity will be used. A day will be decided by the government when all the construction contractors will come and assemble in one place. Government informs before agreement about the requirements to the contractor. The contract has the consignment of both parties. The agreement also consists of penalties if the work is not completed on time. An authorized person from the government side is always present to keep a check on the product’s quality, which is made by the contractor. Therefore, the procurement steps include the need, necessity, it could be raw material, construction of a bridge, dam, a requirement of housekeeping services, etc. Research and checking are done in the market for the companies that provide such services or supply the raw material.

Before giving a final call to the supplier, an internal meeting is done. For example, the tender has to be given to a vegetable and fruit seller. The restaurant owner will first check if the chefs are getting the raw material on time. Quality of the raw material which is received. Also, the price is checked with the other providers.

There could be other conditions that if there is a drought or any natural calamity, will the seller provide the material at the same price or not. There is a specific department in every company which looks after all these terms and conditions. This department is known as the purchase or procurement department.