Procurement is the act of acquiring, buying goods, services or works from an external source.

1. Procurement:
Documentation and Processes
BY: IZUGBOEKWE SETH CHIMEZIE
FOR: PRESTON HEALTHCARE CONSULTING LTD.
DATE: 17TH MARCH, 2017

2. Outline
Objectives
Introduction
Definition of Terms
Evolution of Procurement
Types of Procurement
Difference between Procurement and Purchasing

3. Outline – Cont.
Procurement Documentation & Checklist
Procurement Operations
Key Procurement Objective
5Ps of Effective Procurement Management
Summary
Conclusion

4. Objectives
… understand the concept of Procurement.
… understand the difference between Procurement and Purchasing.
… understand the types of Procurement.
… know the documents used in the Procurement processes /activities.
… benefit of Procurement Management process to Preston.
… approaches to improve the procurement activities.

5. Introduction
 After World War I and II and during the Industrial revolution there was mass
production and thus increase in Purchasing.
 … now the focus of Procurement is to move away from being only a cost savings
center to a growth partner
 … and also from a purchasing center to being considered as a strategic partner
 The need to align procurement objectives with that of the organization is
becoming a necessity.

6. Definition of Terms
Procurement?
Procurement Management Process?
Purchase Request Form?
Purchase Order Form?
Quote or Quotation?
Goods Received Note?
Pre-approved Supplier?
Procurement Committee ?

7. Procurement?
 Procurement is the act of acquiring, buying goods, services or works from
an external source.
 Goods (Supplies) or Services (Works) – best possible cost to meet the
needs of the acquirer in terms of quality, quantity, time, and location.

8. Procurement Management Process ?
(Procurement Process)
 ...method by which items are purchased from external suppliers.
 Managing of ordering, receipts, review and approval of items.
Specifies how the supplier relationships will be managed, to ensure a high level of
service is received.

9. Purchase Requisition Form?
 ... User department (internally used)
Requested by
Department
Description
Managers/Team Lead Signature
Date

10. Purchase Order Form?
 ...Purchasing department (externally used)
Company & Supplier’s Name
Job Title & Product Specification
Effective Date and Delivery Due Date
Delivery Terms
Payment Terms
Company and Supplier’s Signature

11. Quote or Quotation?
Good Received Note?
 ... is a receipt given to the supplier to confirm delivery or acceptance of goods by the
customer
 … document sent to a potential customer offering to sell goods or services at a
certain price, under specified conditions before purchase.

12. Pre-approved Suppliers?
Advertise (News Paper or Other Platform)
Group the applications - station by station; Good, Services and Consultants
Select suppliers according to the established criteria:
oC.A.C
oT.I.N
oCompany Account
oPast Record
oEmail compliant

13. Procurement Committee?
 ... members includes; the Procurement Manager, the Finance Manager and the CEO
 … they shall ensure integrity, transparency, adherence to the principles of best-
value-for-money, and fit-for-purpose is maintained.

14.  Reactive Buying:
 Decision based on price (Cheapest)
 Little to zero research.
 Strategic Sourcing:
Formalized information gathering to get the best possible values in the
marketplace.
Evolution of Procurement

15. Evolution of Procurement – Cont.
 Category Management:
 Presence of cross functional team work to generate procurement outcome
that fully satisfy agreed business needs.
Presence of Sourcing, Negotiation, Suppliers performance measurement
and Cost management.

16. Change Management:
Planning and implementing major organizational and Inter-organizational Changes.
Structured process to move individuals, teams and organizations to the desired state.
Evolution of Procurement – Cont.

17. Types of Procurement
 Direct Procurement:
Items that are part of finished products (raw materials)
 Indirect Procurement:
Operating resources ( Goods and Services; office supplies, consulting services and
out sourcing)

18. Differences between Procurement and Purchasing
 Procurement:
Sourcing activities, Negotiation and Strategic selection of goods and services that
are usually of importance to an organization.
 Purchasing:
Transactional function of Procurement for goods or
services (how goods and services are ordered).

19.  Procurement Processes/Purchasing Processes:
Initiation (on approved Budget):
- Justification.
Approval of request (Procurement Department, Finance, Chief Executive).
Identification of Suppliers and Interaction (Purchase Order Communication,
Negotiation, Request for Quotations)
Differences between Procurement & Purchasing – Cont.

20. Quote Analysis and Vendor Selection
Purchase Order Acknowledgement (Supplier Signs)
Advance Shipment Notice (Payment)
Goods Receipt (Goods Receive Voucher)
Payment to Supplier
Invoice Recording
Differences between Procurement & Purchasing – Cont.
Purchasing

21. Procurement Documentation Checklist – Service & Supplies
 Approved Purchase Request (with Specification)
 Copy of signed Purchase Order, BOQ (renovation contract only) and Signed Contract.
Quotations and Approved Bid Analysis (or Quote Analysis)
Copy of previous Sun System Payment Voucher

22.  Signed Procurement Committee Minutes/Report and Attendance sheet (if the
amount is within the thresh hold of procurement committee rang).
 Signed delivery notes (Supplies Only)
Signed Inspection and Acceptance form (Supplies Only)
Procurement Documentation Checklist – Service & Supplies
- Supplier's document to the user company.

23. Vendor Invoice or Request Letter for payment
Vendor Acknowledgement receipt for payment
 Approved job completion form (for Service).
Procurement Documentation Checklist – Service & Supplies

24. Procurement Operations
 Need Recognition:
whether from internal or external sources
reordered, or a new product
Specific Need:
standards to help determine specifications
- Part number, - Point of reference, - Colour or Weight.

25. Source Options:
Approved Vendor list
Or
Search using Purchase Orders or other sources (Magazine, Internet or Sales
representative)
Price and Terms:
Determine the best price and terms for the product (for commodities or
specialized material)
Procurement Operations – Cont.

26. Procurement Operations – Cont.
Purchase Order:
Use to buy a material between a buyer and seller
It defines:
o The price
o Specifications
o Terms and Conditions
o Any additional obligations

27. Key Procurement Objective
 Support Operational Requirements:
Understand business requirements
Buy products and services:
o right price,
o right source,
o right specification,
o right quantity,
o right time.

28. Key Procurement Objective – Cont.
 Manage the Procurement Process and the Supply Base Efficiently and
Effectively:
o Identify opportunities
o Manage internal operations
o Achieve objectives

29. Key Procurement Objective – Cont.
 Develop Strong Relationships with Other Groups within the Firm:
o liaison with user departments to achieve greater understanding of requirements and
integration
o Timely, pro-active communication with user Department
o Sharing of information i.e. market trends, price, quality, delivery, forecast and
demand
o Highlighting achievements

30. Key Procurement Objective – Cont.
 Support Organizational Goals and Objectives:
 Develop strategies that support organizational strategies:
o Monitor supply markets and trends
o Identify the critical materials and services required
o Support the organization’s need for a diverse and globally competitive supply base
o Develop supply options and contingency plans that support company plans
o Quality reporting as required and continued improved communication

31. Key Procurement Objective – Cont.
 Achieve Value for Money in all procurement activities
Promote innovation

32. 5Ps of Effective Procurement Management
 Proposal:
Primary document issued at the early stage of procurement process
Suppliers are invited to submit proposals to provide goods or services
…which Vendor to select?

33. 5Ps of Effective Procurement Management – Cont.
 Planning:
Decide what to buy? when to buy? what source?
Assign procurement method and the expectation for fulfillment of procurement
requirements.

34. 5Ps of Effective Procurement Management – Cont.
 Pricing:
Represents Vendors’ assessment of the value customers see in the product or
services and are willingly to pay for.

35. 5Ps of Effective Procurement Management – Cont.
 People:
Securing the right people with the right skill will ensure the success of an effective
procurement project (in line with the current and existing requirement).
 Project Management:
Managing Procurement Project ensures that purchased items are selected and
acquired according to the specifications and requirements.

36. Procurement Improvement Approaches
 Network with other colleagues working in procurement
Improve and update knowledge regularly
Follow meticulously the ethics of the profession
Measure and manage procurement performance
Continuous professional development and membership of a relevant
professional body.

37. Summary
 Decision-makers will typically face a range of different contexts, each requiring
particular management practices to deliver intended outcomes.
Decisions made and the practices deployed in these different contexts should be
seen as interdependent, because organizations are resource constrained.
 In productivity practice, the use of e-Sourcing and contract management system
that automate workflow and create/re-use standard templates to prevent “re-
inventing the wheel” will help in the Procurement activities.

38. Conclusion
 Efficient and Effective Procurement Operations has proved to be an
important strategic tool in the business models and decision making of
any organization.
 A long-life (continuous) vocational training and departmental
commitment to drive the procurement operations of an organization
to its peak will produce a healthy procurement environment.

40.  Preston Healthcare Consulting Finance Manual
 Preston Healthcare Consulting Checklist – Supporting Documentation
http:www.procurementclassroom.com
https://www.finance.gov.au/procurement/procurement-policy-and-
guidance/buying/procurement-practice/process-considerations/practice.html
https://www.cips.org/Documents/Membership/Branch%20Event%20uploads/Categ
ory%20Management%/20presentation%20by%20Dave%Porter.pdf
https://www.safaribooksonline.com/library/view/e-procurement-management-
for/9781466621190/ch015sub6.xhtml
References