Steps of the purchasing process include need identification, product and supplier selection, purchase order submission and payment. The process enables individuals and companies to prevent fraud, cut costs, comply with regulations and manage procurement risks. While the process varies from organization to organization, the fundamentals remain the same.Continue Reading
The first step of the purchasing process involves identification of a need that can be solved by purchasing a product. The buyer estimates the cost and frequency with which to purchase the item, lists the required technical specifications for the products and appoints a purchasing team to manage the process.
The second step of the process involves analyzing the technical specifications to determine a specific product that meets the need. During this step, the buyer carries out research on various product types and selects a product that is cost-friendly and durable. The buyer then liaises with the supplier to determine the terms of agreement before making a purchase.
During the third step, the buyer submits a purchase order in paper or electronic form to notify the supplier of the intent to purchase a product. The purchase order identifies the item or items being procured as well as the quantity and cost. It also states the buyer's delivery address and the terms and conditions of the order.
In the fourth step of the process, the supplier dispatches the goods to the buyer, who checks to ensure they are in good order. The buyer then processes the invoice sent together with the goods and sends payment to the supplier within the time established in the initial agreement. The supplier finalizes the process by issuing a receipt as proof of payment.Learn more about Managing a Business