Define the Procurement Process

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The Answer is The procurement process refers to the way business firms purchase the goods they need to produce the goods they will ultimately sell to consumers. Firms purchase goods from a set of suppliers that in turn purchase their inputs from another set of suppliers. These firms are linked in a series of connected transactions. The supply chain refers to this series of transactions, which links sets of firms that do business with each other. It includes not only the firms themselves but also the relationships between them and the processes that connect them. There are seven steps in the procurement process: searching for suppliers for specific products; qualifying the sellers and the products they sell; negotiating prices; credit terms, escrow requirements, quality, and scheduling delivery; issuing purchase orders; sending invoices; goods are shipped; and the buyer sends a payment. Each step is composed of separate substeps that must be recorded in the information systems of the buyer, seller, and shipper.

Define the Procurement Process

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