What are the key steps in the procurement cycle and why are they important?

1) Pre-contract award phase, includes: - Identification of needs (PR or BOM). - Definition of needs. - Procurement planning. - Development of contract terms. - Market survey and engagement (identify potential suppliers). - Supplier appraisal (pre-qualification) and selection of suppliers. - Quotations or tenders (RFQ – ITT). - Analyse quotations and select the most promising suppliers. - Negotiating the best value. - Contract award. 2) Post-contract award phase, includes: - Purchase-to-pay ‘P2P’ cycle (PO placement – order acknowledgment – expediting delivery – advice note with delivery – invoicing – payment to suppliers). - Contract management. - Supplier performance management - Supplier development. - Post-contract lesson learning.

In my experience the most important step after the identification of the need is the creation of a plan. In this step stake holders are identified, timelines are established, special circumstances are identified, expectations are communicated, and the anticipated outcome is visualized. The planning stage is key to the overall success of the procurement. Remember "if you fail to plan, you plan to fail".

Need identification is the foundation of the procurement cycle because it is the 'why' of the process, and the why of any process sets the tone for the 'how'. In order words, if you know the reason for a purchase, you'll have a clearer understanding of how to go about achieving it. For example, if the end user needs generic goods, the work specification/scope will be less strigent than if they require OEM products. These two different scenarios will also influence the choice of contracting strategy.

The Procurement and Supply cycle is made up of 13 steps and it is important to streamline the acquisition of goods and services by minimizing risks to ensure cost effectiveness and quality in the procurement process. 1. Define Business Needs and Develop Specifications. 2. Market Analysis and Make or Buy Decision. 3. Develop the strategy and plan. 4. Pre-Procurement market testing. 5. Develop Documentation and Detailed Specification. 6. Supplier selection to participate in Tender. 7. Issue Tender Documents 8. Bid and Tender Evaluation and Validation. 9. Contract Award and Implementation. 10. Warehouse, Logistics and Receipt. 11. Contract Performance and Improvement. 12. Supplier Relationship Management. 13. Asset Management.

Conducting market research is such a crucial step in the procurement process. It helps the organization to make informed decisions by providing insights into suppliers, pricing and market trends. This helps buyers to negotiate better, Identify potential risks and develop cost effective procurement strategies. In my experience, Never depend on single supplier and always have three suppliers in every category to ensure smooth supply of materials and services.

Market research is one of the most critical phases so you design the right procurement process to suit the market dynamics and ensure the right suppliers are attracted to your process

In my experience, scoping your needs, spend allowance, evaluation criteria and current position, assist in identifying suitable participants (if you don’t go open tender). Consider benchmarking, the market trends and tools to view credentials of registered or interested vendors.

Market research will help a Procurement personnel garner current information about the scope of work ( available suppliers to provide goods/services, pricing overview which can form the basis of one's in-house costs, as well as product/service availability). All these aforementioned information will help in building up the prourement strategy

The preparation of the bidding documents should be based on thorough studies and investigations of the environment including detailed surveys of the site, preparation of the receipt facilities so as to mitigate any undue variations at the early stage of contract implementation.

Your approach should align with your Procurement Policy & processes. This should steer you, based on the expected contract value, strategic importance and risk classification, what the best option is to obtain suitable competitive tension. Also keep in mind the cost of the time invested by you, your team and an evaluation panel, in relation to the level of the procurement activity.

Developing a sourcing strategy is important because it helps optimize costs, ensures a reliable supply of quality materials or services, mitigates risks, and aligns procurement activities with the organization's overall goals and needs.

The procurement strategy is a wholistic plan that outlines the background of need, scope/specification, supplier evaluation & selection process, the procurement process to be used in procuring specified goods/services (competitive bid, single or sole source), if purchase will be one-off (spot purcahse) or recurrent (Contract, SAA...), the medium of technical/commercial proposal receipt as well as criteria to evaluate proposal, all of which has to be internally approved.

An effective procurement strategy begins with a thorough analysis of acquisition needs and the product's position in the supplier market. The approach varies based on product availability, whether abundant or scarce, indicating the number of suppliers. The next crucial step is evaluating the product's importance to our company. Understanding its role enables a more informed decision-making process aligned with organizational goals. These initial steps form a solid foundation for developing a tailored procurement strategy, optimizing resources and enhancing value in internal processes by considering market availability and organizational significance.

In my experience, bids evaluation (and comparison) is one of the most important milestone in procurement process, for more than one reason. In fact, It's right in this phase that: 1. you should find confirmation (or not) about supplier's full understanding of your needs 2. you should find confirmation (or not) that your expectations are in line with actual market's offer 3. you may interact with suppliers over alternative technical or commercial solutions that one or more of them may submit in their bid

In my experience it is also important to leverage reverse auction tools for creating pricing tension between the suppliers and get the best possible price for the commodities where products cannot be distinguished from each other e.g. cleaning supplies

In my experience especially in the Public sector have realized that the most important part of procurement is bid preparation. Evaluation is merely exam marking from a marking scheme but is the actual exam was incompetently set then the outcome will not address the need. Like they say garbage in garbage out. Bid preparation should be the phase where all concerned are involved and come up with a bidding document that addresses all the issues such as quality, sustainability, inclusion, evaluation criteria, and any other requirements that will ensure a successful procurement.

Invitations to tender (ITTs) can either be used to assess technical competence of bidders (TITTs) or favourable commercial proposals (CITTs) ITTs can also be single or double envelope. Single envelope tenders involve bidders submitting their technical and commercial proposal seperately; with the former being submitted before the latter, while double envelops tender involve the simultaneous submission of both technical and commercial proposal.

In my opinion, the fourth step in the procurement cycle, soliciting and evaluating bids, plays a crucial role in ensuring the success of the entire process. It's not just about finding any supplier; it's about finding the right one that aligns with the procurement strategy. Organisations can identify the best quality and value supplier by issuing RFPs, RFQs, or ITTs and meticulously reviewing responses. Predefined criteria and evaluation methods add an element of objectivity to the selection process, helping to prevent bias and ensure that the choice is based on merit. This objectivity is vital for accountability and transparency, fundamental principles in any procurement process, as they help build trust and confidence among stakeholders.

It is vitally important to treat the supplier, contractor or consultant as partners in solving a problem rather than opponents.

Once the recommended supplier has been approved, a contract will be awarded, to form the foundation of the delivery requirements and your own obligations. Both sides need to understand and uphold their obligations in the contractual relationship. Frequently the supplier relies on obligations fulfilled by the customer.

In complex business relationships, signing the contract is essential as it gives commitment from both sides. It also ensures that both the party interests are taken care of, and it builds trust. It is always recommended to sign a legal contract to define the terms of engagement with clauses of separation and period.

The award to winning supplier and signing of the contract marks the end of the contracting process but the beginning of a legal relationship between buyer and seller. Procurement personnel must therefore ensure that this budding relationship stands upon Ts & Cs that are favourable to the end user.

Absolutely right .. some commercial terms can be accepted with certain price implications, but to accept legal terms like Limitation of Liability, Arbitration, Latent Defect, Make Good, etc., are very risky for the equipment suppliers

Your contracting strategy says a lot about how the relationship will perform. If you ram your contracts down the vendors' throats, offloading risk that they are ill equipped to manage, you may find they will do the minimum to be compliant with the deal, and exploit issues to their advantage. This is the behavior you deserve, so make sure the standard you set for compliance meets your requirements. In complex deals, a more open approach to scope, deliverables, pricing model, incentives, risk bearing, and governance will yield far better results.

For a strategic important or high-risk engagement consider implementing a Contract Management Plan. Regardless, delivery performance should be monitored and reviewed at agreed periods. Include discussions on how the delivery against business needs and original requirements, is progressing and discuss plans for continuous improvement. KPIs (Key Performance Indictors) are a valuable tool, provided that they were introduced during the solicit stage (market participants should not be surprised by these inclusions).

Effective contract and supplier relationship management is the final crucial piece of the procurement puzzle. It's where we translate agreements into actions and maintain a productive partnership. This step ensures mutual accountability, timely issue resolution, and continuous improvement. By nurturing a positive supplier relationship, we enhance the chances of delivering quality, efficiency, and satisfaction throughout the procurement journey. It's an ongoing commitment to achieving our objectives and securing value for our organization. In the end, it's not just about signing a contract; it's about making it work for both parties, driving success and innovation in our procurement processes.

Monitoring and Reporting: Monitor supplier performance and report progress against contract terms. Communication: Maintain open channels for effective collaboration and issue resolution. Issue Resolution: Address and resolve issues promptly to ensure smooth contract execution. Changes and Adaptations: Manage contract changes and adaptations during the performance period. Results Evaluation: Evaluate outcomes to ensure alignment with procurement objectives. Feedback Loop: Establish a feedback loop for continuous improvement and mutual understanding. Responsibility Fulfillment: Ensure both parties fulfill their responsibilities and expectations.

This has to be a two way partnership or the contract is doomed to failure. You don't beat your suppliers over the head with a stick as soon as something goes wrong. You need to work with them to ensure the contract is clearly understood on both sides and treat the relationship as a true partnership as opposed to taking a them and us approach. Teamwork is always a positive as opposed to taking an adversarial approach as suppliers are what keep organisations going in one way or another.

Expediting Documentation, arranging inspections, certs, release paperwork and ensuring the parts arrive in the agreed time scale, packaged correctly and in required condition.

Recognise that the procurement steps in the cycle could differ between organisations/ industries and between various approaches in line with your Policy, as discussed under the Develop procurement strategy stage. If the procurement team is not handing over the engagement to a business unit contract manager post award, then another step to be added, is SRM (not to be confused with contract management). Part of contract management will be contract variations and renewal decisions. The team’s role can further extend to other areas, such as asset management.

The procurement process is the series of processes that are essential to get products or services from requisition to purchase order and invoice approval. Although we use procurement and purchasing interchangeably, they differ slightly. While purchasing is the overarching process of obtaining necessary goods and services on behalf of an organization, procurement describes the activities involved in getting process comprises the steps that must be followed while reviewing, ordering, obtaining, and paying for goods/services them. The procurement process in an organization is unique to its context and operations. Regardless of the uniqueness, every procurement management process consists of 3 Ps’, namely Process, People, and Paperwork.

1. Request for Proposal (RFQ), Why it is important? The issuance of RFPs/RFQs will ensure comprehensive proposals from various suppliers are received and thus compare the proposals in price, delivery terms, and other aspects, thereby ensuring transparency and competition. 2.Supplier Selection, Why it is important? Upon analysis of the proposals received, the selection of the right supplier will provide long-term benefits associated with partnership, quality, and timely delivery. The decision-making at this stage calls for thorough evaluation to ensure seamless operations after this.

The question itself is interesting since it qualifies procurement cycle as a system which itself is treated as part of system Broadly the procurement process may be staged into 3 categories- Data collection and analysis Supplier selection and evaluation Implementation and monitoring Data collection may be sub categorised into building procurement plan,creating profile plan and building strategy While part 2 encompasses requirements filtering with supplier selection,bid, negotiation and award The final stage deals with effective implementation,review and improvement measures The bird's eye approach to above process is to ensure operational requirements are met following organisation procurement process and managing supplier data base