QUESTION:
“What should a typical procurement process like? Who should be responsible for getting approvals for items to be procured. Is it the person requisitioning the item, or should this lie with the procurement team?”
— Assistant Administration Manager, Abuja, Nigeria
MY FEEDBACK:
This depends on the sort of item(s) being procured and the organization’s policies. Many organizations use different processes for procurement of direct materials (e.g., raw materials), non-production items (e.g., recruitment services) and capital expenditure (e.g., new factory equipment).
In general, the key stages of a procurement process* are: identifying or specifying the requirement, sourcing and ordering the goods / services, receipt, supplier payment, and on-going supplier management.
It is common for this process to include the following steps [person/function responsible in brackets]:
Clarify requirement and raise requisition
[User]
⬇︎
Approve requisition
[Cost centre owner or budget holder]
⬇︎
Select supplier—competitive sourcing or from approved vendor list;
Finalize pricing, SLAs and T&Cs
[Procurement department—solely or lead responsibility]
⬇︎
Raise purchase order
[Procurement department]
⬇︎
Approve purchase order
[Procurement; Cost centre owner]
⬇︎
Delivery, invoicing, invoice approval, supplier payment, and on-going supplier management
Organizations adopt different approaches for PO approvals. For capital expenditure items it is common for the cost centre owner to approve the PO in addition to Procurement.
*The above is a summarized illustration of a generic process; a more detailed version is available here.
