What Is Procurement? And 7 Stages of Procurement Process

The procurement process can be quite overwhelming for those with little or no experience in this field. However, it is not impossible to understand.

In fact, it is important to have a basic understanding of what procurement involves so that you are better equipped to work within the industry.

You will also get a good idea about the seven stages of procurement and what activities take place during each stage.

What is Procurement?

Procurement is the process of acquiring goods and services from suppliers. It involves identifying the needs of an organization and then finding the best supplier to meet those needs.

For procurement, the organization search for the supplier who will provide the best quality products at the best price. The selection process can involve a number of factors, such as price, quality, and delivery time.

Once the supplier has been chosen, implementation involves ensuring that the products delivered meet the requirements of the organization. This can involve testing and feedback from users before final approval is given.

Procurement is an important process for organizations because it helps them to get the best possible products at a cost that they can afford.

7 Stages of Procurement

Procurement is a process that helps organizations to acquire the best possible goods and services at the lowest possible cost. It has many benefits, including increased efficiency, improved quality, and reduced costs.

Procurement is the process that is broken down into seven stages:

  1. Identifying Requirement for business unit:
    This is when the organization must identify and determine what is required for them to accomplish their task. It requires determining a need, or exactly what is needed from a vendor.
  2. Determining Vendor:
    Once the requirements are identified, the organization must choose from a list of vendors and decide which vendor will best fulfill their needs. It is during this phase that the organization can determine if the chosen vendor has what is needed for them to accomplish their task.
  3. Establishing Contract:
    After the organization has chosen the vendor they want to work with and have settled on a payment schedule, they must establish the terms of their contract. As part of this stage, the organization must negotiate with concerning price, delivery time, terms or other factors. This is when they agree to what type of services will be provided by the vendor and how much it will cost.
  4. Raise Purchase Order:
    Once the terms of their contract are established, the organization must raise a purchase order to allocate the funds to be used. Once a purchase order has been accepted by the company, it must be approved by a higher level of management before it can be sent out to vendors.
  5. Audit the delivered goods:
    Once a purchase order has been sent out, the organization must wait until they receive their goods. This means that the vendor must deliver what they agreed to on the contract. When goods are received, an audit must be conducted by the buyers to ensure that all aspects of their agreement have been met.
  6. Estimate and pay cost:
    Once the goods are received and everything is in order, it is time for the buyer to calculate how much each item costs and sent a payment invoice to the buyer. Once this process has been completed, the organization will release the payment from the company funds.
  7. Maintain Records of Invoice:
    The organization must maintain a record of all invoices sent to the buyer or received by supplier. This is so that if there are any discrepancies in the amount requested, the organization can contact and raise their dispute. It is considered best practices to keep records so that the organization can evaluate how much money each item has generated in sales and how much profit or loss they’ve made overall on their investment over a period of time.


Procurement process is a series of activities and decisions that organizations go through in order to identify, evaluate, and acquire the necessary goods or services.

Goods may be bought in bulk or by the piece, while services may be provided in exchange for money or some other form of consideration such as time or skills.

The goal of this article is to provide readers with an understanding of what goes on behind the scenes during each stage of procurement process.

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