The purchasing process

  1. Need or problem recognition

This is the first stage of purchasing cycle, where the user department identifies/recognizes the need to be fulfilled. User department refers to any department within the organization that is need of goods or services to be purchased.

  1. Need description

This is where the specification of the goods and services are drawn up detailing the quality, quantity and the duration of the contract. This stage involves a number of departments such as purchasing, design/ engineering, and finance department.

  1. Request for proposal or quotations

After the description of the need, the purchasing department sends out RFQ to various suppliers asking them to quote appropriately. There is usually a period of time given for suppliers to respond.

  1. Analysis of the proposal

When the suppliers respond, the quotations are analyzed against the set out criteria an evaluation committee. The results of analysis are given to appropriate committee for further action.

  1. Award of contract

The supplier whose bid is the most responsive the user‟s needs is awarded the contract to supply the goods or services in form of a Local Purchase Order (LPO) or Local Service Order (LSO).

  1. Expediting

Through the purchasing department, the buyer follows up to ensure that supplier performances the contract on time.

  1. Receipt of goods

The goods and services requested from the supplier are received together with the invoice for processing the payment.

  1. Payment

The purchasing department processes the invoice and submits it to the finance department for payment.



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