Private Procurement is the process of understanding customer needs and requirements, selecting suppliers to deliver inputs and raw materials to support business operations, and ensuring the timely payment of invoices.
To clarify further, it is the process of translating customer requirements into the selection of highly capable suppliers, to timely, accurately, cost-effectively deliver high quality, mission-critical inputs, and raw materials to internal customers. As well as assuring the accurate receipt and timely payment of all accrued invoices.
A procurement department is mandated to execute 3 Main Functions:
- Manage the organization’s spending. A good procurement function is pivotal in deploying an effective Annual Buying Plan, leveraging robust forecasting, market analysis, purchasing processes, and cost reduction methodologies.
- Support operations by ensuring the timely acquisition of high quality, low cost, inputs and raw materials to be converted into products and services purchased by an organizations’ internal customers. An organization exists to create value for its customers. The procurement function is pivotal in supporting value creation processes.
- Protect the organization from risk by deploying risk management methodologies such as Failure Mode and Effects Analysis (FMEA). Contract management, and price shock mitigation and avoidance provide huge benefits to an organization, stakeholders and customers.
The public procurement process has its own peculiarities. The process is triggered by explicit needs and requirements which are followed by the following steps:
- Deployment of a procurement or buying plan and strategy
- Selection of suppliers and service providers to deliver the established needs and requirements
- Receipt of requisitions
- Pre-bid talks
- The issue of RFIs, RFQs, RFPs as required
- Receipt of bids
- Evaluation of bids and issue of recommendations
- Negotiations
- Award of Contracts
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