You Need To Identify That There Is A Need To Update The Inventory or Stock. You

1.
Discuss the purchasing procedure and analyse the importance to the

success of the business.
i. Identification need and specification development.

You need to identify that there is a need to update the inventory or stock. You
may also need a business service or ad hoc product
Now you need to decide how much and when you want the products or
services delivered
ii. Notification of authority to purchase

Before the order can be placed, it usually requires some kind of authority
for its purchase. With some purchase orders, this is reasonably automatic.
With a large order that will be put out to tender it could be multi staged.
Request for quotation(RFQ) and invitation to tender(IITs)\

The request for quotations is a procurement method that is used for small value procurements
of readily available off-the-shelf goods, small value construction works, or small value
services procurements.
This procurement method is also known as invitation to quote and shopping, and it does not
require the preparation of tender documents to the same extent as open tendering, request for
proposals or two-stage tendering.
The invitations are not complex, and this method is considered non-competitive because the
procuring entity determines which contractors, suppliers or service providers to request
quotations from as long as a minimum of three are invited.
This procurement method is used under conditions stipulated in the procurement legal and
regulatory framework and, accordingly, can be requested in writing: email, fax, courier, but
not telephonically. Sometimes there are limitations set on the period of time and frequency
within which this method can be used for the procurement of similar goods, work or services.
This is to prevent the procuring entity from splitting requirements in order for them to fall
within the threshold level where the request for quotation method can be applied.
Quotations received in response to a request for quotation should be first evaluated to

determine compliance with the technical specifications or scope of work of the requirement
and also for compliance with administrative requirements of the request for quotations. Only
after the administrative and technical compliance determination, a price comparison is made
between firms found to be compliant, and then a purchase order is signed with the bidder
submitting the lowest price quotation within the stipulated delivery or completion date.
iii. Creating a legally binding contract

iv. The contract management phase.
The contract management process is the interaction between the vendor and the
purchaser that ensures that both parties meet their respective obligations in any
procurement relationship.
The aim is to meet the operational, functional and business objectives required by the
contract and provide a profitable interaction.
The contract management process includes:
Managing Service Delivery

To ensure that the products are delivered as and when they are ordered.
Managing the Relationship
This is the communications between the vendor and the purchaser.
Managing the Contract
This is the ongoing contract administration to ensure that the day-to-day
procurement activities follow the spirit and sections of the contract.
Seeking Improvements
Improvements within a procurement environment mean greater efficiencies and
an increase in profits.
11 Steps in a Standard Procurement Cycle

1. .
2. Specify.
3. Requisition or Order
This is when you write the purchase order or requisition order.
4. Financial Authority
5. Research Suppliers
Repetitive orders usually have set suppliers, although it does no harm
to review the options sometimes. Other orders will either need to go out
to tender or there will be a choice of suppliers.
6. Choose Supplier
The supplier is now chosen.
7. Establish Price and Terms
In a large company, many suppliers will be contracted with a Master
Agreement where prices and terms are set for a defined period. For
other orders, now is the time to negotiate terms and prices.
8. Place Order
At this stage in the purchasing cycle, the order is placed and this
becomes a contract between the business and the supplier.
9. Order Received and Inspected
The goods are delivered, checked in the warehouse and entered into
the inventory. Shortages and breakages are reported to the supplier for
the appropriate credits to be supplied.
10. Approval And Payment
Usually within 30 days, the invoices are received and paid.
11. Update Of Records
The purchasing ledger and stock records are updated. This is
automatically done by many purchasing computer systems.

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1.

Discuss the purchasing procedure and analyse the importance to the

i. Identification need and specification development.

ii. Notification of authority to purchase

Request for quotation(RFQ) and invitation to tender(IITs)\

Quotations received in response to a request for quotation should be first evaluated to

iii. Creating a legally binding contract

The contract management process includes:

Managing Service Delivery

11 Steps in a Standard Procurement Cycle

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