A Procurement Cycle can be divided into following steps :
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Know that you need something.
You must be aware about the need first. Information from the external and internal sources must be there about need of products (fresh or re-ordering)
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Know what and how much do you need.
Once you are aware that department(s) of your enterprise need something you must analyze what do they need and how much.
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What will be source of supply?
After determining the Quality and Quantity of the products, goods, services or works required the procurement department must do a research of possible and best suppliers.
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Pricing and Terms
Pricing of goods, works or services can be analyzed by inviting suppliers to send quotations. In general Prices, Quality and Delivery time of Minimum 3 Suppliers are compared.
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Working with Purchase Orders
Purchase Order works as a legal document which contains Terms and Conditions, Products / Services Requirement, Date of Delivery, Pricing Information, Quality, Quantity etc.
Purchase order is delivered by official e-mails, post mails etc. Acknowledgement of Receipt is always good. Both Parties (Buyer and Supplier) keeps the copy of purchase orders.
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Quality Check and Receipt of Purchase
It is an important step the procurement process. Checking and analyzing the Quality of Received Goods is important. An acknowledgement by the quality assurance team Ensures receipt of goods and services as stated in the purchase order.
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Payments
Once the received orders are accepted by the buyer, Payments are made in the Account of Supplier by Cheese, Direct Bank Transfer or by Cash in some cases.
Payment are made on the basis of Invoices and Purchase Orders. In Some cases Full or Partial Payments are made in Advance. Sales Bill of the order are kept by both the parties.
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Maintenance of Records
Maintenance of Records is very important. All the transactional entries must be saved in proper documents like Purchase Orders, Sales Invoice, Sales Bill etc.
Records are needed for auditing and analysis of performance, taxes, profit & loss etc.
If you or your organization requires bulk purchase of goods, commodities or products you can opt for Online Procurement Systems.
