What Is The Meaning Of Procurement Cycle?
Attention, business owners! Are you familiar with procurement cycle? It is a critical process that can make or break your company’s purchasing strategy. Simply put, it involves the steps taken to acquire goods and services from planning to payment. If you’re not sure what this means for your organization, don’t worry – our blog post has got you covered! In this article, we’ll explore the meaning of procurement cycle in depth and help you understand its importance for successful business operations. So grab a coffee and settle in – it’s time to get savvy about procurement cycle!
What is a procurement cycle?
There is no single answer to this question as the procurement cycle can vary depending on the type and size of procurement being conducted. However, in general, a procurement cycle typically includes four phases: pre-procurement, procurement, supply chain management, and post-delivery.
Pre-procurement is the phase during which potential suppliers are identified and evaluated. This evaluation can include factors such as price, quality, delivery timeline, and past performance.
Procurement is the stage during which contracts are awarded and supplies are acquired. This process can be time-consuming and involve numerous challenges such as negotiation skills and understanding different cultures.
Supply chain management is the stage during which goods are delivered to meet customer demand. This process can be complicated by changes in supplier specifications or ship dates, which requires careful coordination between all involved parties.
Post-delivery is the stage after products have been delivered to customers and it involves ensuring that everything goes according to plan. This includes resolving any issues that may have arisen from the procurement process and ensuring that customers are satisfied with their purchase.
Types of procurement cycles
Procurement cycles are the different stages of a procurement process. There are four types of cycles: pre-project planning, procurement, project execution, and termination.
Pre-project planning is when purchasing managers plan the purchase before initiating any activities. This cycle can include identifying needs, conducting market research, and developing a business case.
Procurement is when buyers make offers to suppliers for goods or services. This cycle can include negotiating prices, reviewing bids, and selecting a supplier.
Project execution is when suppliers deliver the goods or services to the customer. This cycle can include quality control checks, tracking deliveries, and issuing invoices.
Termination is when contracting parties either agree to terminate the contract or complete its terms. This cycle can include resolving disputes, collecting payments, and closing the contract
The procurement cycle steps
The procurement cycle is a model for the management of purchasing and supply activities. It has six steps: market research, acquisition planning, acquisition execution, monitoring and evaluation, and corrective action/remediations.
Factors that affect the procurement cycle
The procurement cycle is a series of steps that a company goes through to acquire goods or services. The procurement process can be divided into four stages: Planning, Evaluation, Selection, and Contracting.
The planning stage involves developing a strategy for acquiring the desired resources. This includes understanding the customer’s needs and wants, researching potential suppliers, and creating a cost estimate.
The evaluation stage involves conducting interviews and reviews of potential suppliers. This stage is important because it allows the company to find the best supplier for the job based on price, quality, and delivery dates.
The selection stage involves choosing between the qualified candidates. In this stage, companies look for vendors who have the right equipment, are able to meet deadlines, and have a good reputation.
Finally, in the contracting stage, the company signs a contract with its chosen supplier. This contract sets forth all of the terms and conditions of the purchase.
Conclusion
Procurement cycle is the process by which an organization acquires goods and services. It includes planning, acquisition, procurement, delivery, installation, and checkout/acceptance of the product or service. Procurement cycle can be divided into four phases: pre-purchase phase, purchase phase, post-purchase phase and disposal/reuse phase. The purpose of each stage is to meet the needs of the customer while protecting organizational interests.