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Procurement operations, as the name suggests is the act of procuring or obtaining goods and services. The process can entail preparation, like, homework and research, and be dealing with the requirement, in addition to, handling end receipt and payment approval.

Though it sounds easy, one should not forget that the act of procuring for a company demands meticulous processing. It is important that the funds, both public and corporate, are managed responsibly, irrespective of the economic situation. Though serving an essential role in company operations, procurement operation can be misjudged and misquoted under maintenance and strategic planning.

Procurement Operations Explained in Detail: 

One could break down the act of procurement into the following steps:

  • Identifying Requirement: This is a crucial stage as one needs to determine the standards, plan the purchase as per the required quantity for the right price and from the right source.

  • Specific Requirements: The procurement manager must be aware of the specifications that the user demands; making certain that it is the right product for the company. This is where standard specifications inside the company prove helpful.

  • Checking for the Right Source: The decision of choosing the right source to obtain the product or service is vital. The company may have a vendors list, if not then one has to look for a supplier using purchase orders or exploring other sources such as the information available on the internet, or magazines. The supplier should not only be able to provide the required but do it by the given time, as per cost and user specification.

  • Value Analysis: A company needs to evaluate all information when determining the appropriate price and terms for the requirement. Demand for a customized product or service can affect this decision.

  • An issue of Purchase Order: A purchase order can be defined as an official offer from a buyer to the seller. The offer will include the specifications, like quantity, color, type, and the price agreed upon.

  • Delivery of Purchase Order: The purchase order once sent to the supplier via email, or fax is acknowledged by the same. A copy of the purchase order is stored by both the participants for future reference.

  • Accelerating the Purchase: There would be a given timeframe by which the supplier needs to deliver the product or service. To avoid delays, there should be frequent follow-ups to ensure on-time delivery. Dates for payment and completion of work are two important aspects that get affected in case of delay.

  • Accepting and Evaluating Purchase: Once delivery is completed, the company can either accept it or reject it, if it doesn’t meet their given specifications. If accepted, the company should pay the supplier.

  • Approval and Payment: It’s very important that the invoice, the receiving document, and the official purchase order correspond with each other during final payment. Only then, both the customer and the supplier have fulfilled their part of the trade. Discrepancies, if any, should be settled before completion of payment, which can be in the form of cash, check or electronic transfer.

  • Maintaining Record: To avoid issues during audits, the company needs to organize documents like purchase records and purchase orders that are helpful in verification of tax information or warranty information.

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