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Step 1: Requisition
- The process starts with a requisition from a department or individual within the organization who identifies the need for a particular product or service.
- The requisition includes details such as the item description, quantity, preferred vendor, and any other relevant information.
Step 2: Approval
- The requisition is then reviewed and approved by the appropriate authority, such as a department manager or budget controller.
- The approval ensures that the requested purchase aligns with the organization's budget, policies, and procurement guidelines.
Step 3: Vendor Selection
- Once the requisition is approved, the procurement team or purchasing department identifies potential vendors who can supply the requested product or service.
- Send RFQs to selected vendors, requesting their price quotes and any additional information required.
- Evaluate factors such as price, quality, delivery time, and vendor reputation to select the most suitable vendor.
- Initiate negotiations with the selected vendor to finalize the terms and conditions. Once agreed upon, create the Purchase Order document.
Step 4: Purchase Order Creation
- With the vendor selected, a purchase order is created. The purchase order includes all the necessary details, such as the vendor's name, item description, quantity, price, delivery date, and any specific terms and conditions.
- The purchase order is then sent to the vendor, either electronically or through traditional mail and request confirmation of the order.
Step 5: Order Fulfillment and Payment
- Upon receiving the purchase order, the vendor processes the order and prepares the requested product or service for delivery.
- Once the order is fulfilled, the vendor sends an invoice to the organization for payment.
- The invoice is reviewed, verified, and matched against the purchase order and any supporting documentation, such as delivery receipts.
- Finally, the payment is made to the vendor, completing the purchase order process.
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