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      HomeProductsProcurementUnderstand Procurement Processes to Streamline Your Business

      Understand Procurement Processes to Streamline Your Business

      Procurement refers to the process of acquiring goods, services, or works from an external source, typically through purchasing or contracting. The procurement process helps a company acquire the necessary resources at the right time, quality, and price to meet its needs, making it essential for any company. Procurement activities may involve identifying potential suppliers, evaluating proposals, negotiating contracts, and managing the delivery and payment of goods and services.

      Effective procurement practices are critical for companies to manage costs, mitigate risks, and maintain quality standards. By streamlining, businesses can reduce the time and resources needed to acquire goods and services and optimize their spending to maximize value for money. 


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        What is the Procurement Process?

        The procurement process is a systematic approach companies use to acquire goods, services, or works from external sources. It typically involves several stages, from identifying the need for the product or service to payment and delivery. The procurement process is crucial to ensure companies have the necessary resources to meet their objectives. It helps them manage costs, mitigate risks, and maintain quality standards.

        The procurement process can vary depending on the size and complexity of the company, the type of goods or services being acquired, and the industry in which the company operates. However, the basic principles of the procurement process remain the same, including the identification of needs, the development of specifications and requirements, the selection of suppliers, the negotiation of contracts, and the delivery and payment of goods or services.

        Also read: ERP System Procurement: Definition, Benefits, and Features

        Procurement Process Steps

        Procurement process stepsProcurement requires executing a lot of steps. However, by going through each step carefully and thoroughly, the company will get maximum results. Here are the steps in the procurement process that you should know about:

        Needs recognition

        Needs recognition is the first step in the procurement process, where a company identifies the need for a product or service that is not currently available internally. Many factors, such as changes in the market, changes in business requirements, or the need to replace or upgrade existing resources, may prompt this step. This step aims to clearly define the needs of a company and establish the requirements for the product or service.

        Purchase requisition

        The second step in the procurement process involves converting the need for the product or service identified in the first step into a formal request. Furthermore, this step involves preparing a purchase requisition document that outlines the specifications of the product or service needed. Besides that, the appropriate department or authority receives and approves the purchase requisition.

        download skema harga software erp
        download skema harga software erp

        Requisition review

        Requisition review is the third step in the procurement process. The purchase requisition submitted in the previous step is reviewed for completeness, accuracy, and compliance with procedures. Furthermore, this step involves evaluating the requisition to ensure that the requested product or service meets the company’s needs, the budget and timeline constraints are reasonable and realistic, and the procurement complies with relevant regulations and policies.

        Solicitation process

        The solicitation process is the fourth step in the procurement process, where the company invites potential suppliers to submit proposals or bids for the product or service being procured. This step typically involves issuing a request for proposal (RFP), request for quotation (RFQ), or invitation to bid (ITB), which outlines the specifications and requirements of the procurement, as well as the terms and conditions of the contract.

        Evaluation and contract

        This step evaluates the proposals or bids from potential suppliers and selects a vendor to provide the product or service. Furthermore, this step involves analyzing and comparing the proposals or bids based on price supplier experience, and reputation.

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        Order management

        This step manages the product or service delivery from the vendor. Furthermore, we coordinate with the vendor to ensure they deliver the product per the contract terms and promptly address any issues.

        Invoice approvals and disputes

        Invoice approvals and disputes are optional but important steps that can occur after the order management step. Furthermore, this step involves reviewing and approving invoices received from the vendor and resolving any disputes that may arise. During this step, the company verifies that the invoice received matches the contract terms and that the product or service has been delivered as per the agreed-upon terms.

        Record keeping

        Record keeping is an essential part of the procurement process and involves maintaining accurate and complete records of all activities. Throughout the procurement process, starting from the needs recognition stage and continuing until the completion of the order management.


        In conclusion, the procurement process is a critical business function involving the acquiring of goods or services from external vendors. Proper execution can help organizations obtain value for their money and ensure compliance with relevant regulations and policies.

        To streamline the procurement process and effective execution of each step, companies can benefit from using a procurement system. HashMicro’s software is equipped with various modules and features, which can help make your procurement process more efficient. Use our system and receive up to 70% funding support!

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