Procurement Management Process - The

2019 Guide
Paper-driven procurement has a cascading effect on an organization’s bottom line. A

routine purchase generates bundles of paperwork, and needs too many back-and-forth

emails to set things straight.

Procurement inefficiencies cost organizations a huge chunk of cash in delayed

purchases, missed discounts, and transaction disputes. Attempting to speed up the

procurement process with outdated tools like spreadsheets and emails is like trying to

start a microwave with steel and flint.

To take advantage of early purchase and payment discounts, organizations need to toss

stone-age procurement practices out the window and embrace technological

solutions. Modern procurement tools can transform a painfully slow procurement

strategy to world class overnight.

If your procurement process still relies on ancient tools, it’s time for a major technology

makeover. Here’s all you need to know to power up the procurement process.

What Is a Procurement Process?

It’s 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 slightly differ from each other.

While purchasing is the overarching process of obtaining necessary goods and services

on behalf of an organization, procurement describes the activities involved in obtaining

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. Process
The list of rules that need to be followed while reviewing, ordering, obtaining, and

paying for goods/services. Checkpoints/steps increase with the complexity of the

purchase.

2. People
These are stakeholders and their specific responsibility in the procurement cycle. They

take care of initiating or authorizing every stage of the process. The number of

stakeholders involved is directly proportional to the risk and value of the purchase.

3. Paper
This refers to the paperwork and documentation involved in every stage of the

procurement process flow, all of which are collected and stored for reference and

auditing reasons.

What Is the Procurement Process Flow?

To keep the procurement management process fair, transparent, and efficient, a good

understanding of the procurement process flow is key. Although the procurement

process of organizations differs from each other, the flowchart below sums up the

important steps in a procurement process.

Steps involved in a Procurement Process
Every procurement management process involves several elements, including

requirements determination, supplier research, value analysis, raising a purchase

request, reviewal phase, conversion to purchase order, contract administration,

monitoring/evaluation of received order, three-way matching, payment fulfilment, and

record keeping. These are the important stages in the procurement process flow:

Step 0: Needs Recognition

The preliminary step in a procurement process is recognizing the need for a product. Be

it a brand new order or a recurring purchase, needs are analyzed and the availability is

double-checked before creating a request for purchase.

Step 1: Purchase Requisition

Typically, a procurement process starts with a purchase requisition. The requester sends

a request for procurement (paper form, electronic, or phone) to the purchasing

department.

Step 2: Review of Request

The purchase request is then reviewed by the procurement/finance team. Approved

requests become POs, while rejected requests are sent back to the requester with the

reason for rejection. All these can be handled with a simple purchase order app

Step 3: Budget Approval

In enterprises, once the procurement team raises a PO, it is forwarded to the accounting

department to receive budget approval.

Step 4: Quotation Requests

Once the budget is approved, the procurement team forwards several requests for

quotation (RFQ) to vendors with the intention to receive and compare bids to shortlist

the perfect vendor.

Step 5: Negotiation & Contract

Once a vendor is selected, the contract negotiation and signing are completed, and the

purchase order is then forwarded to the vendor. A legally binding contract activates

right after a vendor accepts a PO and acknowledges it.

Step 6: Receive Goods/Services

The vendor delivers the promised goods/services within the stipulated timeline. After

receiving them, the purchaser examines the order and notifies the vendor of any issues

with the received items.

Step 7: Three-Way Matching

At this step, three documents–purchase orders, packaging slips (that arrive with the

order), and vendor invoices–are lined up and reconciled to pinpoint discrepancies and

ensure that the transaction is accurate. Discrepancies should be addressed once they are

discovered.

Step 8: Invoice Approval Payment

Once three-way matching is complete, the invoice is approved and forwarded to

payment processing depending on organizational norms.

Step 9: Record Keeping

After the payment process, buyers make a record of it for bookkeeping and auditing. All

appropriate documents right from purchase requests to approved invoices are stored in

a centralized location.

Why Should You Automate Your Procurement

Management Process?
A solid procurement automation software can streamline the cluttered procurement

process and keep it transparent. No information is lost and stakeholders can raise,

approve, or reject items on time. A streamlined procurement process offers better

control over every stage of the procurement lifecycle.

Furthermore, an efficient procurement automation software:

 Minimizes the chaos made by paperwork

 Shortens the procurement lifecycle

 Reduces human dependency intervention and errors

 Lessens the workload of all stakeholders

 Keeps the process accurate and consistent

 Injects transparency into the process flow

 Sticks to the predefined procurement cycle

Choosing an automated procurement management software rather than depending on

emails and excel sheets will speed up the procurement process, ensure accuracy,

enhance efficiency, and save time and resources.

Must-Have Features in a Procurement
Management System
While most procurement management systems promise the same list of benefits, their

inbuilt features set them apart from each other. So, double-check whether they have

vital features to ensure a hassle-free procurement.

Here are essential features organizations need to look for in a procurement management

software:

 Spend Control (with custom rules and approval workflows)

 On-the-go approval (centralized cloud storage)

 Risk mitigation (with audit trails, role-based access, and conditional visibility)

 Easy integration (API integration with other procurement apps)

 Insightful reports (get actionable insights from real-time reports)

  Simple customization (drag-and-drop, visual form builders)

 Pre-built templates (to shorten the implementation cycle)

 Interactive dashboards (to know the status of any request at a glance)

Summary
Cloud-based procurement automation tools like KiSSFLOW are suitable for both SMBs

and enterprises. KiSSFLOW allows organizations to create a dynamic procurement

management process that provides them with a tactical advantage.

Organizations can resolve procurement hurdles they face with archaic procurement

tools. Today’s e-procurement tools are capable of straightening the procurement process

flow in a jiffy. KiSSFLOW offers tools and resources every business needs to automate

end-to-end procurement and scale it up or down to meet their business needs.

And best of all, you don’t need a developer to automate the procurement process. Even

business users like finance staff who don’t have any coding expertise can create a

purchase order app in 15 minutes.

Looking for a software that strengthens the procurement process and minimizes the

chance for fraud and errors? Give KiSSFLOW a try for free. It’s a solution crafted with

best procurement practices in mind, to deliver a procurement experience you’ll love,

every single time.