Procurement is the governed process of defining a business need, selecting a supplier, agreeing commercial terms and managing the resulting purchase and supplier relationship. It is broader than placing orders. Procurement connects demand, competition, contracting, risk, delivery, cost and performance.
What does procurement include?
- Demand and specification development
- Market research and sourcing strategy
- Supplier discovery, qualification and competition
- Bid evaluation, negotiation and contract award
- Ordering, delivery and invoice controls
- Supplier performance, risk and renewal decisions
How does a procurement process work?
The business confirms the need and approval, determines the appropriate sourcing route, evaluates capable suppliers, records the award rationale, contracts the selected supplier and hands the result into purchasing and payment operations. The depth of competition and review should reflect value, risk and reversibility.
Procurement vs. purchasing
Purchasing covers transactional activities such as creating orders and acquiring goods or services. Procurement includes the wider decisions that establish what to buy, from whom, under which terms and with which controls.
What should the procurement record prove?
Keep the approved requirement, supplier evidence, evaluation, conflict disclosures, negotiation record, approval, contract and performance history. A signed purchase order proves an order was issued; it does not alone prove that the supplier selection or price was appropriate.
