SCM115 Application Exercise: Procurement Process Analysis

This assignment provides a comprehensive overview of the procurement process, essential for supply chain management. It details the steps involved, starting with identifying purchasing needs and finding suppliers. The process includes supplier selection based on factors like price, quality, and service, followed by price negotiation and contract finalization. The assignment explains the creation and use of purchase requisitions and orders, which are formal contracts between buyers and sellers. It also covers the payment process upon receiving invoices, emphasizing the importance of matching purchase orders and invoices to ensure accuracy. Finally, the assignment highlights the significance of auditing deliveries to meet quality standards and maintaining proper records for tracking expenses. This detailed analysis helps students understand the complexities of procurement within a business setting. This solution is contributed by a student to Desklib, a platform providing AI-based study tools.

Gurpreet Singh Gill.
A00105702
Purchasing
SCM115
Application Exercise (15%)
Submitted to professor: Dr.Diljeet Kaur
 Procurement Process:

The procurement is the process in which factors like searching, buying the things
and services from the outer sources. It the process that generally related to
purchasing of items when there is need of it. Moreover, it is the way of keep running
the company in proper manner with least back order. It is the process of purchasing
the things at least possible cost after working on various factors like quality,
quantity, time, and location. In the field of the supply chain the proficient
procurement is must for any firm to keep the flow of goods at the best possible
prices. The whole this process consist of finding the suppliers, negotiation, buying
and at last payments. This process is the way for company to keep the cost low,
managing risk, cycle of sourcing and contracts.
 Various Procurement processes:
Process Group Process
1. Planning Plan procurement
2. Monitoring Control procurement
3. Executive Conduct procurement
4. Closing Closing procurement

There are following steps in procurement:
1. Find the things to buy:
At first every business need the goods to sell in the market
and it is the first step of procurement process. In this, the department that deals
with procurement first find out that what product is needed to buy and then they
start working on it. Then start finds the suppliers of that product. At this step the
budget of the procurement is also made.
2. Choosing the suppliers:
After finding the things that needed to buy the next
thing is in procurement process is selecting the suppliers. It is very significant
step in process to select the correct vendor. In this stage the supplier is
selected according to the price of product, quantity, quality of product,
service, warranty, service for customers and also guarantee it offers. All these
factors are under focus before selecting the supplier in procurement process.
3. Negotiate the price with selected vendors:
After selecting the supplier the new and very essential step begin that is to
make the contract with suppliers. In this the collaboration are made by the
suppliers and buyers by singing the contract. In this step the buyer make the
negotiations with suppliers.

Critical factors like price structure, timelines for delivery, terms and conditions are assessed
in this process. Businesses get insights into cost saving opportunities such as dynamic
discounting through detailed analysis and negotiation of contracts.
1. SUBMIT PURCHASE REQUISITION & CREATE PURCHASE
ORDER
Once the contract is finalized with a supplier, the next step involves submitting a purchase
requisition (PR) that has a description of the good/service, pricing and quantity, supplier
information, and the approval workflow.
After this is approved, the finance team releases the purchase order (PO) to the supplier. A
purchase order is a formal contract between the buyer and seller to buy goods or services
which has information like the price, specifications, terms and conditions of the product or
service and other obligations.
2. PAYMENT PROCESS UPON RECEIVING AN INVOICE
Once the vendor receives a PO, he sends an invoice mentioning the price for requested goods
or services. The procurement team matches the PO and the invoice to ensure quality and
quantity. Then the respective departments validate the invoice and send it to finance team for
payment.
Within the payment terms defined in the agreement, the payment has to be made. In the
accounts payable process, there is a best practice followed by matching the invoice against an
approved PO and the delivery details for the order called three-way matching.

If everything matches up the accounts team sends payment to the vendor within the specified
timeframe. The payment is released pre or post delivery depending on the payment terms
established between the organization and its suppliers.
3. RECEIVE AND AUDIT DELIVERY OF REQUESTED GOODS OR
SERVICES
Based on payment and contractual terms, suppliers deliver the goods or services. Upon
receipt, audit must be done by the companies to ensure that the suppliers have met
expectations of their quality standards.
4. MAINTENANCE OF PROPER RECORDS OF INVOICES
As a best practice, it is important to effectively store all documents from
purchase requisition through invoice in one central location in order to
track spend and other various expenditure categories within the
organization.