Ordered material is shipped, delivered to the ordering party, and the supplier is paid accordingly. A contract will include all necessary information such as price and quantity of material, delivery date, etc.

Thereafter, a contract is signed that is a binding legal document between the supplier and the ordering party. Some negotiations with suppliers is made regarding the price, availability, and delivery schedule of the products/services. Some samples of the products can be obtained for quality examination. Once the supplier is known, the product/service quality is checked, and any necessities for services such as installation, warranty, and maintenance parameters are investigated. Based on that, quotation requests or information requests are sent to the suppliers or they are contacted directly. Supplier ContactĪfter gathering the requirements, one looks for the suppliers who can fulfill those requirements. Then for the required products and services, it is necessary to look for suppliers who can satisfy the requirements. Procurement process starts with gathering information about a product and its quantity. Procurement in most modern organizations follow some sequential steps which are described below − Requirement and Information Gathering Getting the minimum price for a product or service is often necessary, however it is equally important to maintain a balance between the product availability, quality, and vendor (seller) relations. Organizations try and keep inventory levels at a minimum, due to the prices associated with high levels of inventory at the same time, it can be detrimental to stop production due to shortage of raw materials.

However it is critical to maintain a right balance between quantity, price, and time. It is subdivided into following parts −īasic procurement is a process of acquiring goods or services in the right quantity, at the right price, and at the right time. Procurement should be done in such a way that materials are ordered in correct quantity, with a proper value at the proper time. The process of buying materials and obtaining services from vendors or dealers is called procurement. Every organization acquires material or services to complete its business needs.

Procurement type in sap