What is The Procurement Management Process?

Published on: 10 February 2020 Last Updated on: 13 September 2024
Procurement management

Procurement contracts can often be very overwhelming to create and manage. It involves a lot of different moving parts, from negotiating to price, setting out milestones, defining the scope of work and so much more. You want to ensure the top quality of work for your company without incurring too many extra costs. Learning about the procurement management process can help you navigate this journey with a bit more ease and confidence.

What is the procurement contract management process?

Having a procurement contract management process involves managing the ordering, receipt, and approval of materials from suppliers. It also deals with managing relations with suppliers and sellers. By having an established procurement contract management process, you can ensure that the materials and services provided meet your needs.

What does the procurement management process look like?

The process of procurement management will look different from any project, but loosely follows the following workflow:

Recognizing the need

 

Before you even think of procuring anything, your company will realize it needs a certain product or service. Maybe it is something as simple as new computer monitors for one department, or a much bigger project like the construction of a new building as your company expands.

Planning

planning

In this stage, your team will smooth out the details related to the project, determine the budget, and start to draft out a contract. You will begin to write SOW (statements of work) to serve as a document outlining the work being contracted, for all outsider contractors you work with. Check out a sample statement of work here.

Depending on the size of your company and who is in charge of purchasing, you may need to request approval from a higher-up at this point in the procurement management process. A senior manager may need to approve budgets and make amendments to the statement of work.

Requesting quotes

After approval is given, whether that is from a manager or from yourself, you can send out a request for quotations (RFQ) to various sellers. This is when different companies bid for your project. Depending on the risk involved, whether that be physical or financial, there may be more or fewer bidders.

Reviewing and finalizing proposals

This is the stage where your team selects the vendor you want to work with. Usually, teams will have a set of criteria that will use to determine which seller to go with. The reputation of the company and prior experience working with them may also come into play during decision-making.

Negotiation and signing

Negotiation

Once you’ve finalized your selection, your team will have to negotiate with them. After both the buyer and seller are happy with the procurement contract, they will sign the contract and purchase order (PO) will be sent to the seller to purchase materials. At this stage, the contract is active and the project is underway.

Managing and overseeing contractors

The procurement management process doesn’t quite end there. Having someone request frequent status updates and oversee the project will help you keep up-to-date. The progress can be tracked down and in this way you can prevent your company from getting blind-sided by huge issues late on. Monitoring and tracking their work will help you understand if the project is going as planned. If things aren’t going well, at least you can take action earlier in the project than react to it at the end.

Having a records management system in place will make things much easier at the end of the contract as you move closer to payment.

End of procurement contract

procurement contract

Once the contractor completes the work set out in the contract, the procurement management process has ended. This is when the contract formally releases liability and payment is processed. At this stage, invoices, records and other documents from both parties are matched and compared against to ensure that the fees are correct, this is usually achieved with the help of a purchase requisition platform like Coupa’s system.

Knowing what the procurement process is like is integral to any business. You may be on either end of the process, either buying or selling to someone. Governmental bodies often undergo procurement to take on projects like marketing or auditing.

Content Rally wrapped around an online publication where you can publish your own intellectuals. It is a publishing platform designed to make great stories by content creators. This is your era, your place to be online. So come forward share your views, thoughts and ideas via Content Rally.

View all posts

Leave a Reply

Your email address will not be published. Required fields are marked *

Related

Health Insurance

Small Business Guide to Private Health Insurance Exchanges

When it comes to building a business, health insurance is often a concern. Entrepreneurs who venture off on their own sometimes leave a great health insurance plan behind when they do so. For many aspiring entrepreneurs, this risk is one of the main limitations that prevent them from pursuing their passion. There are complexities that small business owners with employees will face that will never be an issue for one-person organizations. Figuring out how to offer health insurance, and what’s required in this politically tumultuous time, can be confusing and overwhelming. That’s why so many small business owners are using a broker and a private health exchange. Using a Broker : First of all, let’s look at why so many small businesses choose to use a broker when it comes to health insurance. Researching options and trying to understand the insurance industry jargon can be an absolute nightmare. As a business owner, you wouldn’t tell clients seeking your expertise to handle their business themselves. People come to you because you’re an expert in your field. Why wouldn’t you do the same? A broker can do the research, and understand what is being offered. They can translate the industry language into something you can understand and process, and make recommendations based on your needs. They save you time and money, not only finding something that works for you but helping with the enrolment process. In a nutshell, health insurance procuration is something you can delegate while you focus on operating your business. What is a Private Exchange? When told to consider a private exchange program, small business owners often ask the same question: “how does a private exchange work?” Private exchanges are a flexible approach to group health insurance that allows employees to pick and choose aspects from various health plans to fit the allocated budget. Employers and small business owners get control over their contribution and, with a broker, find something that fits their budget upfront. Rather than being presented with one option, employees can choose from a wider range of plans. So if Jim in sales has different health coverage needs than Pam in reception, they can choose different plans that suit their individual requirements. If their needs extend beyond what you have budgeted for, they simply pay the difference in premiums themselves. When you use a broker to procure health insurance through a private exchange, you don’t have to deal with multiple bills from multiple providers. Rather, everything is consolidated and billed to you directly through the broker on one convenient invoice. Political and Business Considerations : There has been a lot of back and forth about the Affordable Care Act (ACA) and President Trump’s proposed redactions and changes. Many of these changes won’t take place until late this year or early 2019. For now, the same Essential Health Benefits (EHBs) apply. These benefits include things like emergency services, ambulatory care, prescription drugs, prenatal and postnatal care, etc. While it is possible that changes are coming in the near future, for now, it is best to go with what you know. Working with a professional broker can help you navigate the murky waters and better explain how proposed changes will impact your small business, what you can do to prepare, and how things will work in the meantime. As a small business operator, a lawsuit resulting from not properly adhering to what is expected of you regarding insurance can break your business. Unlike other options, like Professional Employer Organizations (PEOs) you still have complete control over other aspects of your business with a private exchange. Private exchanges are not only convenient for you and your employees but help you cover your assets. Read Also: How To Get Low-Cost Life Insurance For Seniors Tips To Lower Your Insurance Costs Fred Loya Insurance Company

READ MOREDetails
VC Firms

Why Are VC Firms Interested In Cryptocurrencies: An Analysis

The Crypto industry is progressing at a rapid and dynamic pace. The pace is fast enough that people are comparing this as if they are looking for Gold. And as the maturity of the sector is growing, people are encountering the ocean of retail and traditional investors gathering to the Crypto landscape. Even the venture capital firm and other institutional investors are eyeing the opportunities to invest in Cryptocurrency for any profit that can be made. With the rise of Cryptocurrency popularity, many Crypto startups have popped up in the financial market. Although they might be a part of a new and comparatively young industry, they have plenty of equity to offer. That being said, venture capital firms view Defi space and NFTs as viable investment options. So let’s explore some more to see what Venture Capital has seen in Cryptocurrency that made them think about investing in the Crypto space. What Are Venture Capital Firms? Venture capital firms have an ocean of investors who wish to yield a substantial amount of cash soon enough. The fund managers send the prospectus to the interested investors and invite them to participate. The prospectus is a document selling them the investment funds. Once the investors are ready to comply with the prospectus, the fund manager spends considerable time reviewing thousands of projects to determine the growth potential. Although Venture Capital Firms are made up of prudent investors, they are aware of risks and spread their bets to minimize the losses. Many startups tend to go this route when they are not ready to go public. This also includes Bitcoin startups. However, this method can sometimes be risky as Cryptocurrency startups can simply be a scam. To know more, visit the bitcoin hack review. Why Are Venture Capital Firms Interested In Cryptocurrencies? To understand why Venture Capital firms are interested in Cryptos, let’s see some statistics to know whether the demand for Cryptocurrencies actually exists among the VC firms. The global VC firms have invested more than $27 billion in Cryptocurrencies, and as days are passing, the investment amount is set to rise even more. One of the best VC firms in the Silicon Valley, Andreessen Horowitz, has recently invested $20 million in Coinbase. If everything goes well, the investment is set to generate a return of $2.5 billion. That establishes why so many VC firms are interested in Cryptocurrencies, right? YES!!! You can carve out money internally when you invest in Crypto projects. You only get a middle ground between doing nothing and launching a separate fund. Thus, VC firms can attract more and more investors in the Crypto field every day. Crypto projects also allow VC firms to expand their business portfolio and diversify their investments. In addition, it keeps them at a lesser risk when the economy fluctuates. For example, during the COVID19 pandemic, Bitcoin was trading at its highest record of $30,000. The VC firms saw an increasing opportunity during this time. It made them realize that even when Cryptocurrency is a speculative asset, it can generate a solid return when the macroeconomic system undergoes turmoil. Investing in Crypto coins also allows the VC firms a lot of flexibility, which keeps their heads in the right place even when recession ensues. This is probably why the VC firms have already invested $17 million in the Crypto sector at the beginning of this year. Many VC firms have also partnered with limited partners and lawyers to stabilize their status quo as they invest more and more money in virtual coins. They believe that the future holds great potential for the digital economy, so the greed of staying ahead in the curve is also propelling the venture capitalists to invest more and more money into Cryptocurrency every day. Putting It All Together Since the Crypto regulation has been eased up worldwide, it has become easier for VC firms to invest in Cryptocurrencies. This is because there are no more challenges left to deal with, at least on the regulatory front, which was restricting the VC firms into investing in the Crypto coins. Therefore, if you need more information on them, let us know in the comment section below. We will get back to you with an answer in no time. Read Also: Why Entrepreneurs Should Pay Attention To Cryptocurrencies In 2021 Can Blockchain Help In Other Ways Apart From Cryptocurrencies? 5 Good And Bad Things To Consider Before Investing In Bitcoins Rumors About Trading – True or False?

READ MOREDetails
Debt Consolidation Loans Recommended

Are Debt Consolidation Loans Recommended for Credit Card Consolidation

Debt consolidation has become a very common practice in the modern world. Financial advisers encourage people to take this approach especially if you want to become debt-free. Always go for a credit card loan during emergencies and look for means and ways of clearing it fast. Credit cards loans only assist you because you get them very fast. However, they come with more disadvantages the benefits to the borrower. At this point, consolidating all your credit card loans into one big but cheaper loan becomes a necessity. Importance of Debt Consolidation: Debt consolidation loan refers to taking out a personal loan that is equivalent to the sum you owe on your high-interest credit cards. After you use the loan to pay off the credit card, you must now pay back the lender that extend the loan to you. If you can find a personal loan with a low-interest rate, you will be saving money in repaying your credit card debt. Lower interest rate means that you can pay off your credit card debt and become debt-free faster. How Debt Consolidation Works: Many online personal loan lenders offer a loan amount of up to $35,000 to more than $100,000. The loan amount that you get approved will depend on whether you have the income to pay back. Once you are approved of the loan, they may send you a check or direct deposit the amount into your bank. You can then use the funds to pay back the credit card debt yourself. Some lenders can help you to submit the payment to your preferred credit card companies. In this case, you have to tell them what lenders to submit the payment and the amount to submit for each lender. Read More: Top 5 Types Of Startup Business Loans Other benefits of Debt Consolidation: Now that you can afford to pay back the loan, you must be diligent in making the repayment every month. In this way, your credit score will be build-up by the time you finish repaying the loan. You should check your credit report prior to applying for a personal loan use for the purpose of debt consolidation. The debt consolidation loan could also help to extend your loan term and reduce the monthly payment. Making a minimum payment on the loan means that you are only paying the interest rate. The actual amount you owe will remain the same in this case. This option is ideal for people who have limited income and need help in repaying the loan. The lender will review your credit profile and financial documents when deciding whether to approve the loan. It is easy to get a low-interest debt consolidation loan when you have a good/excellent credit score. In addition, you also must have a low outstanding debt to qualify for a low-interest rate. The length of repayment will also affect the interest rate. Longer repayment term causes you to pay a higher interest rate. A debt consolidation loan can consolidate your credit card debts into a single monthly payment. Before that, you have to remember different due dates from different credit cards to make sure you promptly submit the payment to the credit card company. It is easy to miss a payment when you have multiple due dates to remember. Now, you just have one repayment date to remember. This ensures that you will always remember to make the repayment on time. Read More: How To Get An Auto Loan At A Low-Interest Rate Conclusion: It’s a nice move to consolidate all your credit cards debts into a single but less expensive loan. You will have a peace of mind from the single installment and reduced interest rates. You will also rebuild your credit history as you continue repaying the loan as long as you make timely monthly installments. Read More: Best Home Buying Tips For First Time Buyers Oh, Crop! Killer E-Commerce Mistakes You Need To Conquer Questions To Ask When Working With A Web Developer

READ MOREDetails