Procurement Process

The procurement process is the attainment of goods and services at the ideal total price of ownership to meet the needs of the purchaser in terms of quality, quantity, time and location. It involves managing purchasing decisions under conditions of shortage. There are typically seven procurement steps in the procurement life cycle. These steps involve information gathering, supplier contact, background review, negotiation, fulfillment, maintenance and renewal.

The procurement process is usually split into two categories. These two types involve direct production-related procurement and indirect non-production-related procurement. The procurement process of direct procurement involves only manufacturing settings. Direct procurement manages supply chain management. It directly affects the process of production of raw materials, components and parts of finished products. Dissimilar to direct procurement, the procurement process of indirect procurement involves managing resources that a business buys to activate its operations. Public procurement is often an essential sector of the economy.