Procurement Management

Procurement vs Purchasing
The main difference between procurement and purchasing is that purchasing only focuses on
order costs and how to lower them, whereas procurement focuses on the overall value creation
and total costs throughout the purchasing cycle. Procurement is an umbrella term that covers
other purchasing activities and ultimately aims to manage supplier relationships, risk mitigation,
lowering costs and contract compliance.
What is Procurement?
The procurement process is about sourcing services and goods from an external place, like a
supplier, manufacturer, or third-party vendor. It’s all activities that surround getting ready to buy,
and making decisions under conditions of scarcity.
It’s at this time, a business needs to make the smartest choices to ensure the purchase of top-
quality goods and services at a reasonable price. Any tasks prior to the establishment of a
purchase order will fall under the procurement function.
This can include (but is certainly not limited to):

 Identification of a need (asking each internal department)

 Sourcing activities (identifying potential suppliers)
 Obtaining quotes and approving purchase requests
 Development, negotiation, and contract management
 Post contract tasks (managing supplier relationships)
 Supply market monitoring
 Payment and record-keeping

Steps in the Procurement Process

An effective procurement department oversees everything involved in procuring, from
identifying what goods/services are needed for growth to maintaining the right records. How a
business shapes its procurement team and process will influence factors like a company’s size,
industry, resources, and organizational structure.
When it comes to effective procurement management and strategic sourcing, a business typically
follows these steps:

1. Recognition of business needs

2. Purchase requisition
3. Requisition review
4. Establish vendor relationships
5. Evaluation and contract
6. Order management
7. Invoice approvals and disputes
8. Documentation and record-keeping

What is Purchasing?
Purchasing is part of the procurement process and involves the system an organization or small
business uses to acquire goods and services. It’s the action of going out and buying something,
once a business knows what it wants. As a function, purchasing is a subset of procurement but
should be identified as a separate process.
For example, purchasing involves more than just finding the right price. You must also consider
customer service, warranties, payment terms, etc. Although many businesses attempt to set a
standard in the purchasing process, it can vary greatly between companies and industries.
Steps in the Purchasing Process
Unlike procurement, the steps involved in purchasing must be regulated for every vendor. It
should employ routine best practices for everyone.
Steps in the purchasing process include:

1. Receiving the purchase requisition (PR)

2. Obtaining and evaluating vendor quotes
3. Receipt of goods and raw materials into stock
4. Invoice approval process
5. Accounts Payable (AP) sends payment to suppliers

Key Differences Between Procurement and Purchasing

Although the concepts are intertwined, they are not the same. How do we differentiate between
procurement vs. purchasing?
Goals
The goal of procurement is to fulfill a specific business need. It goes beyond the simple process
of ordering goods or services. The purpose of procurement is to dig deeper into buying and
exploring different options. to identify the most ideal choice based on certain criteria. This can
be anything from the cost to the location of the vendor.
Procurement is all about long-term goals that contribute to achieving strategic outcomes and
competitive advantage. Purchasing has short-term goals. The purpose of purchasing is to arrange
business spending and acquire a specific resource. This involves getting all the 5 “rights”:

 The right price

 The right quality
 The right quantity
 The right place
 The right time

Proactive vs. Reactive

The process of purchasing is more reactive to internal needs. You buy something once it
becomes apparent you need it.
On the other hand, procurement takes a proactive approach. That’s because it works with each
department to identify the right needs. Procurement also contributes to product design with
working market knowledge.
Vendor Relationship Management
Purchasing is strictly transactional. It focuses on the act of buying rather than building
relationships. The person responsible for purchasing is focused on efficiently executing the
transaction.
Procurement is more relational. The procurement specialist focuses on establishing and
maintaining valuable long-term relationships with qualified vendors/suppliers.
The supplier’s relationship will differ greatly with each point of contact depending on the goal of
the job.
Pricing and Value
Procurement puts all the emphasis on the value of a certain good or service. They’re looking
more at the brand doing business, rather than the price. Purchasing always puts price over value.
This makes sense since the job revolves around properly controlling expenditure.
Order of Operations
Although procurement involves the act of purchasing something, it will always come before
buying. The scope of procurement activities extends all the way from identifying a need, to
fulfilling it and paying the bill. Purchasing happens towards the end of the procurement process,
when the need is already fulfilled.
Focal Point
Purchasing focuses on fundamental tasks that surround obtaining goods and services. This
includes ordering, receiving, and payment. The primary focus is on transactional activities like
purchase requisitions, purchase order management, and payment processing.
The focal point of procurement is much more “bigger picture.” The main goal is to identify and
fulfill a business need as quickly and efficiently as possible. Sometimes referred to as
the procure-to-pay process (P2P), it involves more than spending money. A procurement team is
expected to build and maintain long-lasting relationships that save the company money in the
long run.
What is E-Procurement?
E-procurement is the purchase of goods and services through information and networking
systems. This includes the internet, electronic data interchange (EDI), and enterprise resource
planning (ERP). Optimizing the procure-to-pay cycle starts with the automation of all tasks
related to purchasing and has a significant impact on your company’s bottom line.
Procurement and expense management software can help a business better collaborate on
purchasing workflows and approved vendor catalogs. It can include complex approval systems
based on location, department, and dollar thresholds and three-way invoice matching that
requires zero human interaction.
The technology also facilitates supply chain management and offers companies access to mobile
opportunities. Users can download a mobile app that helps request, approve, and receive goods
on the go. The right procurement platform will automate simple tasks, eliminate overspending,
and yield big savings (both time and money)—regardless of company size.
Is E-Procurement the Solution for Your Business?
Every modern business needs to digitize its processes to stay competitive. All financial systems
run smoothly in the cloud, and procurement is no different. Quality can be greatly improved, as
the right software enables total control over spending.
Modernizing procurement provides a variety of advantages, including:
Ease-of-Use
A cloud-based procurement strategy helps a business meet evolving market demands without the
need for expensive upgrades. It’s easy to use with a small learning curve.
The flexible nature of e-procurement means shortened project schedules and a faster time to
market. It takes less time to develop and implement a product/service around processes while
ensuring cost savings.
The cloud also reduces the number of manual transactions through the entirety of the P2P cycle.
Selection criteria enable a solution to automate tasks like:

 Purchase order management

  Process non-manual supplier invoices
 Manage revisions to procurement paperwork
 Weigh negotiated prices

Enhanced Visibility
The cloud is a shared environment, so digitizing your procurement process improves visibility
and, subsequently, performance. Procurement management solutions have an intuitive dashboard
that provides a 360-degree view of the entire procure-to-pay process.
Users can check the status of any purchase or deliverables at a glance. This helps a company
enhance efficiency by immediately spotting gaps in the process and fixing them in real-time. A
business also has access to easy-to-interpret reports that ensure you’re making data-driven
decisions with more strategic planning.
Improved Spend
Cloud-based procurement management is super cost-effective. A business doesn’t need to pay
upfront costs (or maintenance fees) for a SaaS procurement solution. This allows a company of
any size to not only streamline the entire procurement process but keep operational costs at a
minimum.
Costs can also be controlled by choosing the most value-driven suppliers while appraising risks
at a fraction of the price. No matter the scope of the project, e-procurement helps reduce both
time and processing costs while adhering to company policy and eliminating overage spending.
Employee Satisfaction
E-procurement also serves the employees of an organization. When you give people the
autonomy to make their own purchases, it elevates job satisfaction and adds to retention.
Workers have the tools to immediately utilize approved vendors. The faster employees can
access the supplies they need, the quicker the job gets done. It also ensures compliance, reduces
unnecessary spending, and helps a business achieve cost savings.
Improved Collaboration
E-procurement enables a seamless flow of information to everyone, irrespective of a specific
role, department, or location. It allows people to communicate, all the time, from anywhere. It’s
the ultimate digital bridge.
Procurement technology helps speed up the decision-making process and reduces turnaround
time. This only happens through quick data retrieval and seamless collaboration.
Universal access to cloud-based procurement systems fosters a cohesive space where everyone
gets exactly what they need. It also allows everything to be monitored according to company
policy.
Continuous Integration
Licensed procurement software often comes as a disconnected piece of code that stands apart
from existing procurement tools. Today, more brands gravitate towards cloud management. This
allows for seamless integration opportunities and capabilities through API integration. It also
helps to eliminate manual intervention and data redundancy and offers a single version of the
truth without any friction.
Additional Benefits:

 Smart redistribution of labor

 Improved compliance and regulation
 Eliminates bottlenecks in the approval process
 In Conclusion
No matter what role you serve in the procurement process, understanding how the system works
as a whole is critical to job success. Deeper insight into the entire P2P workflow will help define
purchasing as both an important part of procurement, as well as a separate component.
E-procurement will help a business handle the process of researching, requisitioning, sourcing,
procuring, and paying more efficiently. It assists with the strategic selection of goods/services
based on a company’s budget, values, and more.
For quick reference, procurement is the broader process that’s proactive and more relational.
Purchasing is transaction-based, direct, and reactive. It’s as simple as that!
Make-or-Buy Decision

An act of choosing to develop a product in-house or outsource its production from external
vendors

What is a Make-or-Buy Decision?

A make-or-buy decision refers to an act of using cost-benefit to make a strategic choice between
manufacturing a product in-house or purchasing from an external supplier. It arises when a
producing company faces a diminishing capacity, experiences problems with the current
suppliers, or sees changing demand.

The make-or-buy decision compares the costs and benefits that accrue by producing a good or
service internally against the costs and benefits that result from subcontracting. For an accurate
comparison of costs and benefits, managers need to evaluate the benefits of purchasing expertise
against the benefits of developing and nurturing the same expertise within the company.

Summary

 A make-or-buy decision refers to an act of choosing to develop a product in-house or outsource

its production from external vendors.
 Companies use the total transaction costs accrued in developing products to reach a make-or-buy
decision.
 Make-or-buy decisions reward firms with a competitive advantage and reduce the cost of
production and capital investment.
Understanding Make-or-Buy Decisions

Managers must incorporate in-house production costs when considering in-house production. It
includes all the transaction costs involved in creating the product or service. It can also include
extra labor needed for production, monitoring costs, storage requirements costs, and waste
product disposal costs resulting from the production process.

Similarly, businesses must focus on both the production and transaction costs when considering
outsourcing from outside suppliers. For example, the product’s price, sales tax charges, and
shipping costs must be factored in. Companies must also include inventory holding costs, which
comprise warehousing and handling costs, as well as risk and ordering costs.

The make-or-buy decision is sometimes treated as a financial or accounting decision. While it is

important to conduct an accounting assessment and settle for the low-cost approach, it is more
crucial to understand the basis of the decision.

Thus, companies must consider the strategic dimension of make-or-buy choices because they
determine the profitability of the company and play an important role in its financial health. They
can impact corporate strategy, core competence, cost structure, customer service, and flexibility.

Make-or-Buy Decision Triggers

A company’s decision on whether to make or buy is based on its core competence. The
production cost and quality problems are the major triggers of a make-or-buy decision. Other
factors are managerial decisions and a company’s long-term business strategy that dictate the
current operations pattern.

Historical policy decisions may also compel a company to consider in-sourcing or outsourcing.
Businesses can use such patterns to procure some parts of services from outside suppliers
regardless of the company’s capability. Within the framework, the trend towards in-sourcing can
be attributed to better quality control, existing idle production capacity, or unsatisfactory
performance of outside suppliers.

In contrast, factors that may trigger a company to outsource a part rather than produce internally
include the need for multiple sourcing, lack of internal expertise, cost reduction, the introduction
of a new product or modification of an existing product or service, and reduced risk exposure. A
company with a previous reputation for successfully providing outsourcing services may be
considered to sustain a long-term relationship.

Make-or-Buy Decision Criteria

Setting up a standard make-or-buy process that applies to all companies is a complicated process.
It is partly due to companies’ distinct behavior patterns and the fact that businesses operate in
different business environments that are unique to each business. However, cost accounting
remains the primary dimension of the make-or-buy decision.

Companies evaluate outsourcing to determine if the current overhead costs can be minimized to
access new resources. While cost remains the hallmark of any business decision, other factors
such as strategic, technological, core competency, risks, and relationships, also constitute
outsourcing decisions, not to mention factors involved in developing and introducing a new
product.

For example, managers can consider research and development (R&D), design, engineering,
manufacturing, and assembly as sources of production costs when conducting an actual cost
analysis. The competitors’ financial capabilities and technological abilities should also be
evaluated during a sourcing decision. Companies can evade the pitfalls typical with make-or-buy
decisions when the cost is the only variable used when considering the technological aspects.

Benefits of a Make-or-Buy Decision

A make-or-buy decision framework relates to autonomy, and a company selects from the many
advanced options to account for various factors associated with outsourcing.

1. Lower costs and higher capital investments

One of the most notable advantages that a company enjoys when embracing a make-or-buy
decision approach is that it can lower costs and increase capital investments, regardless of
whether it decides to make materials in-house or subcontract from an external vendor.

2. Source of competitive advantage

A rigorous make-or-buy analysis can also act as a source of competitive advantage. For example,
a company can increase the value it delivers to customers and shareholders from its core service
and skills. It can also stay flexible by adopting a make-or-buy decision approach.

Such a company is better placed to weather the storm of a market downturn. To realize the
benefits, companies must consider the internal and external environment in which they operate.
In particular, the culture in which such decisions are reached, and the agenda of the parties
involved can influence the decisions and their implementation, as well as the sustainability of the
policy.

What is Procurement?

Procurement is a technique and structured method used to streamline an organization’s procurement

process and achieve desired results while saving cost, reducing time, and building win-win supplier

relationships. Procurement types can be direct, indirect, reactive, or proactive in nature.

 What’s the difference between indirect, direct, and services procurement?

Direct, indirect, and services procurement are subsidiaries of the overarching procurement process and

differ in definition, assignments, and more. By taking a deeper look at the difference between these

processes and understanding what they comprise, stakeholders will have an easier time taking appropriate

measures to fulfill their needs.

Direct Procurement Indirect Procurement Services Procurement

Procuring and managing the

Acquisition of goods, materials, and/or Sourcing and purchasing materials, goods, or
contingent workforce and consulting
services for manufacturing purposes services for internal use
services

Ex: Raw materials, machinery, and resale Ex: Professional services, software
Ex: Utilities, facility management, and travel
items subscriptions, etc.

Drives external profit and continuous

Takes care of day-to-day operations Used to plug process and people gaps
growth in revenue

Comprises of stock materials or parts for Used to purchase external services

Used to buy consumables and perishables
production and staff

Establish long-term, collaborative supplier Resort to a short-term, transactional Maintain one-off, contractual

relationships relationship with suppliers relationships with suppliers

What is a Procurement Process?

The procurement process is a structured method of procuring goods and services needed for an

organization. This process saves cost, reduces time, and builds win-win supplier relationships.

The procurement process is the series of processes that are essential to get products or services from

requisition to purchase order and invoice approval. Although we use procurement and purchasing

interchangeably, they differ slightly.

While purchasing is the overarching process of obtaining necessary goods and services on behalf of an

organization, procurement describes the activities involved in getting process comprises the steps that must

be followed while reviewing, ordering, obtaining, and paying for goods/services them. The procurement

process in an organization is unique to its context and operations.

Regardless of the uniqueness, every procurement management process consists of 3 Ps’, namely Process,

People, and Paperwork.

1. Process

Process comprises the steps that must be followed while reviewing, ordering, obtaining, and paying for

goods/services.

2. People

These are stakeholders, and their specific responsibility in the procurement cycle is to initiate or authorize

every stage of the process. The number of stakeholders involved is directly proportional to the risk and

value of the purchase.

3. Paper

This is the paperwork and documentation involved in every stage of the procurement process – all of

which are collected and stored for reference and auditing reasons.

Types of Procurement
 Procurement can be categorized in several ways. It can be classified as direct or indirect
procurement, depending on how the company will use the items being procured. It can also be
categorized as goods or services procurement depending on the items that are being procured.

 Direct procurement refers to obtaining anything that’s required to produce an end-product. For
a manufacturing company, this includes raw materials and components. For a retailer, it includes
any items purchased from a wholesaler for resale to customers.
 Indirect procurement typically involves purchases of items that are essential for day-to-day
operations but don’t directly contribute to the company’s bottom line. This can include anything
from office supplies and furniture to advertising campaigns, consulting services and equipment
maintenance.
 Goods procurement largely refers to the procurement of physical items, but it can also include
items like software subscriptions. Effective goods procurement generally relies on good supply
chain management practices. It may include both direct and indirect procurement.
 Services procurement focuses on procuring people-based services. Depending on the company,
this may include hiring individual contractors, contingent labor, law firms or on-site security
services. It may include both direct and indirect procurement.

Types of Procurement

Direct Indirect Goods Services

Procurement Procurement Procurement Procurement

Physical items All people-

typically held based services
Any good or
All non- as inventory, procured,
service
What is production- whether for whether for
required to
it? related goods direct or direct or
produce an
or services indirect indirect
end product
procurement procurement
purposes purposes

Raw materials,
Law firms,
components Office
Raw materials, contractors,
and parts, supplies,
wholesale contingent
Examples machinery, marketing
items, office labor, on-site
items services,
supplies security
purchased for utilities
services
resale
What is a Procurement Contract?

A procurement contract is a legally binding agreement between a buyer and a seller. In it, the seller

agrees to make supplies available to the buyer, or undertake the buyer’s project, meeting certain

specifications, and offering a set price (often with volume discounts).

In return, the buyer agrees to either take delivery of and pay for a specified volume of the seller’s supplies

or reimburse for the cost incurred in creating the supplies or undertaking a project.

A procurement contract provides the groundwork for building and managing the customer-vendor

relationship and eliminates the guesswork. To manage suppliers better, we have put together a strategic

sourcing guide. Download it now to improve supplier relationships and cost savings.

What is included in a procurement contract?

The essence of a procurement contract is to spell out the terms governing the relationship between the

buyer and seller. In other words, the procurement contract lays out what both buyer and seller are expected

to deliver and thus, what they can expect from one another.

The main contents of a procurement contract include the following.

Monitoring and performance control

Monitoring contract efficiency, managing procurement relationships, making adjustments and corrections

as required, and closing out contracts are all part of this process.

Monitoring and performance control ensures each party receives the benefits of the contract; protects each

party’s rights; and makes sure that each party fulfills their contractual obligations.

Receipt, inspecting, and acceptance

Upon receipt of supplies made by the seller, the inventory needs to be inspected to ensure it meets the

specifications agreed upon. How it will be managed is set forth in the procurement contract.

Contract termination

If at any time both sides of a procurement contract should find their differences irreconcilable, the contract

outlines terms under which it will be nullified so both parties go their ways.

Alternative dispute resolution

Instead of taking issues to court (which often proves profitable for the lawyers only), a procurement

contract can outline how disputes will be fulfilled to ensure that any issues that potentially come up during

the course of the buyer-supplier relationship will have a pattern for settling them.

Financial management and payment

This stipulates how financial matters will be managed including invoicing, payment terms, methods, and

preferences. A procurement contract makes it clear how the money will change hands should the terms of

the contract be met.

Performance securities

A procurement contract guarantees a performance quality that both buyer and seller are obligated to expect

and in turn deliver during the course of their working relationship.

Contract completion and closeout

A procurement contract acts as the guidebook that details how supplies will change hands, in what manner,

and what behavior should be deemed acceptable.

 Types of procurement contracts

Depending on your situation, what you’re looking to achieve, and your respective tolerance for risk, there

are several types of procurement contracts you can agree on with your vendors. And it’s important to note

that a contract is essentially a risk management tool that gives both parties expected performance the other

can guarantee.

Here are the three main types of procurement contracts obtainable, plus a breakdown of the different

branches that make them up.

Fixed price contract

A fixed-price contract guarantees that a buyer will get specific pricing for products or services, provided

the buyer orders a minimum required amount of inventory.

Fixed-price contracts are ideal for essential supplies that are critical to the buyer’s supply chain since the

contract locks the buyer into an agreement that guarantees them supplies at reasonable pricing, provided

they keep to the terms of the contract

That is to say, a fixed price contract guarantees supplies in return for a guaranteed minimum order

quantity.

Fixed-price contracts are subdivided into three main niches, namely:

 Firm Fixed Price

In the most basic fixed-price contract, a firm fixed price holds a guarantee between a buyer and a supplier

that the latter will make a minimum order volume and that the seller will provide them at a specified cost.

 Fixed Price & Incentive Fee

 An FPIF procurement contract stipulates that the buyer will pay a fixed price for a minimum order amount

of supplies, plus an incentive should the supplier meet and exceed the terms of the contract.

As the name implies, the seller is guaranteed payment for the supplies offered and the buyer is guaranteed

a specified volume. The buyer promises a bonus should the required order volume be available for

delivery at the promised price.

This kind of contract often comes into play when there’s scarcity for the particular supply the buyer is

looking to lock down a deal for the future.

 Fixed Pricing with Economic Price Adjustment

An FPEPA contract is such that the buyer and supplier are locked into an agreement where the buyer

agrees to buy a certain volume of supplies and the seller agrees to supply them at a fixed price—provided

the cost of producing the product or service in question remains the same. If production prices for the

supplier increase, the supplier has leeway to adjust appropriately to protect their margins.

Say, after an FPEPA contract is signed that inflation sets in, and the supplier’s costs rise beyond the levels

agreed within the contract. On his part, the supplier is justified to raise the pricing for the supplies delivered

to the buyer in turn.

Fixed-price contracts are often entered into when the buyer is looking to acquire a pre-built product with a

fixed price that can be expected to remain stable over a period of time. The supplier has invested into

producing the inventory and the buyer, on the other hand, has an idea of how much inventory they’ll need

for the near future and wants to guarantee supply.

Cost reimbursement contract

A fixed-price contract holds both buyer and seller to a guarantee that:

 The buyer will make a minimum volume of orders from the seller, and that

 The seller will provide an optimum price for the buyer—as long as the buyer follows through with the

minimum required order

On the other hand, a cost-reimbursement contract specifies that whatever the capital cost a seller invests

into developing a product, service, or undertaking a project, the buyer will reimburse it.

Cost reimbursement contracts fall into three main categories, namely:

 Cost Plus Fixed Price

Under the CPFF model, the seller delivers a quote for the product, service, or project the buyer is looking

to get delivered. Quantity and quality specifications are laid down and the seller is expected to carry the

expenses for undertaking the project from scratch until completion.

Upon completion, the buyer reimburses the seller the expenses incurred in the course of delivering the

order plus a fixed bonus, say a percentage of the overall figure that the order amounted to.

Should the order be completed unsatisfactorily (i.e. without meeting up to the buyer’s requirements) the

seller may have to bear the cost associated with the unusable product since they deviated from the laid

down terms in the contract.

 Cost Plus Incentive Fee

Using the CPIF model, the seller agrees to foot the cost of creating the order the buyer has requested. In

return, once the order is completed successfully (i.e. in accordance with all the specifications agreed upon

in the contract), the buyer is obligated to reimburse the seller any cost incurred with the project, as well as

an agreed incentive fee for successfully delivering the order.

 Conversely, should it be the seller fails to meet up satisfactorily with the terms of the contract, a Cost Plus

Incentive Fee contract requires the buyer and seller to split the cost of the unsuccessful project.

 Cost Plus Award Fee

A CPAF contract is designed such that the seller provides the goods, and services, or undertakes the

project as agreed with the buyer. Once completed, the buyer reimburses the supplier for their costs and an

award fee at the buyer’s discretion. The award fee can either be as large or as small as the buyer wishes.

Cost reimbursement contracts place the capital cost for developing and providing the buyer’s order on the

seller but demand the buyer reimburse the seller with interest if the terms of the contract are met.

Cost reimbursement contracts often come into play in a situation where the buyer is looking to buy a

custom product or service, or where the seller is undertaking a project that’ll require ongoing effort to

complete, rather than just collecting payment and shipping them to the buyer.

Cost reimbursement contracts are designed so since the cost of delivering the buyer’s order is not yet

certain so the seller agrees to undertake the product development or project and get reimbursed in full

when the stipulated targets are delivered.

Time & material contracts

Under a time and material contract, the buyer agrees to pay for the time and material invested into the

product or service desired. In return, there’s a binding agreement that the time and material will not exceed

a certain volume in order to keep expenses reasonable and avoid fraud.

A prime example of where this comes into play would be in the digital services industry where a freelancer

might offer a quote of 100 hours to deliver a newly built website. The business ordering the website

counters and bargains for the website development project to not exceed 80 hours, priced at $100 per hour.
 Once both parties have an agreement, the project can proceed. And when the website project is fully

delivered, the web developer can forward an invoice for the hours spent plus other material expenses such

as web hosting, premium themes, SaaS subscriptions (Cloudflare, etc.), business email setup, etc.

Steps involved in a Procurement Process

Procurement process involves several elements, including requirements determination, supplier research,

value analysis, raising a purchase request, reviewal phase, conversion to purchase order, contract

administration, monitoring/evaluation of received order, three-way matching, payment fulfilment, and

record keeping.

Here are the seven key steps involved in the procurement process flow:

1. Step 0: Needs Recognition

2. Step 1: Purchase Requisition

3. Step 2: Requisition Review

4. Step 3: Solicitation Process

5. Step 4: Evaluation and Contract

6. Step 5: Order Management

7. Step 6: Invoice Approvals and Disputes

8. Step 7: Record Keeping

Step 0: Needs Recognition

The needs recognition stage of a procurement process enables businesses to sketch out an accurate plan for

procuring goods and services in a timely manner and at a reasonable cost.

Step 1: Purchase Requisition

Purchase requisitions are written or electronic documents raised by internal users/customers seeking the

procurement team’s help to fulfill an existing need. It comprises key information that is required to procure

the right goods, services, or works.

Step 2: Requisition review

The procurement process will commence only after the purchase requisition is approved and cross-

checked for budget availability. In the review stage, functional managers or department heads review the

requisition package, double-check if there is a genuine need for the requested goods or services, and verify

whether necessary funding is available.

Approved purchase requests become POs (purchase orders), while rejected requests are sent back to the

requisitioner with the reason for rejection. All these can be handled with a simple purchase order software.

Step 3: Solicitation process

Once a requisition is approved, the procurement team will develop an individual procurement plan and

sketch a corresponding solicitation process. The scope of this individual solicitation plan ultimately

depends on the requirement's complexity.

Once the budget is approved, the procurement team forwards several requests for quotation (RFQ) to

suppliers to receive and compare bids to shortlist the perfect supplier.

Step 4: Evaluation and contract

Once the solicitation process is officially closed, the procurement team and the evaluation committee will

review and evaluate supplier quotations and delivery times to determine which supplier will be the best fit
to fulfill the current need. To streamline this process, consider using legal AI software for contract

review to analyze key terms and clauses in the potential contracts quickly.

Once a supplier is selected, the contract negotiation and signing are completed, and the purchase order is

forwarded to the supplier. A legally binding contract activates after a supplier accepts and acknowledges a

PO.

Step 5: Order management

A purchase order is issued to the selected supplier either against the newly executed contract / standing

agreement / list price. The supplier delivers the promised goods/services within the stipulated timeline.

After receiving them, the purchaser examines the order and notifies the supplier of any issues with the

received items.

Step 6: Invoice approvals and disputes

This is a crucial step in the procurement process and having procurement software like Kissflow

Procurement Cloud gives you a competitive edge over others. With Kissflow, you can perform three-way

matching between GRN, Supplier Invoice, and PO to check if you have received the order correctly and if

there aren’t any discrepancies. Once three-way matching is complete, the invoice is approved and

forwarded to process the payment.

Step 7: Record Keeping

After the payment process, buyers record it for bookkeeping and auditing. All appropriate documents,

from purchase requests to approved invoices, are stored in a centralized location.

Challenges in Procurement
However, you will face many challenges without a comprehensive procurement software to streamline the

above steps. Here are some key pain points you’re likely to face with procurement:

Fragmented supplier base:

Procurement often involves engaging with numerous suppliers across various categories.

Managing a fragmented supplier base can be challenging, leading to inconsistent service levels,

complex contract management, and difficulty leveraging volume-based discounts or negotiations.

Lack of visibility:

Limited visibility into procurement spend can complicate tracking and analyzing expenses. This lack of

visibility can hinder cost control efforts and impede budgeting and strategic decision-making.

Maverick spending:

Procurement may involve multiple organizational stakeholders who make purchases independently. This

decentralized approach can lead to maverick spending, where employees bypass established approval

processes, resulting in higher costs, inconsistent quality, and missed savings opportunities.

Manual processes:

Reliance on manual and paper-based processes for procurement can be time-consuming, prone to errors,

and hinder efficiency. Manually handling tasks such as purchase requisitions, approvals, and invoice

processing can be labor-intensive, impacting productivity and increasing the risk of inaccuracies.

Compliance and risk management:

Procurement involves compliance with internal policies, legal requirements, and supplier agreements.

Managing compliance and mitigating risks, such as supplier non-compliance and data breaches, can be

challenging and time-sensitive.

Limited strategic focus:

Procurement activities can often be transactional, focusing more on operational needs than strategic value.

This can hinder identifying cost-saving opportunities, supplier consolidation, and strategic partnerships.

Addressing these pain points requires organizations to adopt efficient procurement processes to improve

data visibility, promote stakeholder collaboration, and implement strategic sourcing practices to optimize

procurement operations.

Optimize your procurement process

Now that we have covered the challenges to procurement, here are different strategies you can implement

to easily overcome them and establish a solid and optimized procurement process in your organization.

Streamline processes with automation:

Leverage technology and automation tools to streamline and digitize the procurement process. Implement

a source-to-pay procurement solution to manage your suppliers, purchases, invoices, and contracts and

automate workflows, reduce manual errors, and improve process efficiency.

Centralize procurement activities:

Establish a centralized platform where your procurement team can manage all procurement activities. This

will streamline and automate the procurement workflow, ensuring transparency and accountability

throughout the process leading to improved efficiency and cost savings.

Conduct spend analysis:

Perform a thorough procurement spend analysis to gain visibility into expenditure patterns, identify cost-

saving opportunities, and prioritize categories for strategic sourcing initiatives. This analysis can help

consolidate suppliers, negotiate better contracts, and leverage volume discounts.

Implement strategic sourcing:

Strategic sourcing enables you to source the right suppliers, conduct competitor bidding and negotiate

better. This will help you Identify critical suppliers and build strategic partnerships to enhance supplier

relationships and achieve long-term cost savings.

Establish clear procurement policies and guidelines:

Develop regulatory requirements, clear internal policies, and industry standards. This will help you

monitor and manage approval processes, spending limits, and supplier risk. It also supports audit trails and

documentation to demonstrate compliance.

Foster stakeholder collaboration:

Engage and collaborate with various departments and stakeholders to understand their requirements and

align procurement activities accordingly. Involve end-users in the supplier evaluation and selection process

to ensure their needs are met and increase user adoption.

Integrate with other systems:

Ensure that all the different tools you’re using, like accounting software and ERP systems, are connected to

ensure a seamless flow of data. This also reduces duplication of effort and improves overall process

efficiency.
Monitor supplier performance:

Regularly assess supplier performance and establish key performance indicators (KPIs) to track service

levels, delivery times, quality, and pricing. Use this data to evaluate suppliers and make informed decisions

regarding supplier retention, contract renewals, or exploring alternative options.

Continuously improve:

Embrace a culture of continuous improvement in indirect procurement. Encourage feedback from

stakeholders, monitor industry trends, and implement feedback loops to identify areas of improvement and

drive ongoing optimization initiatives.

By implementing these strategies, organizations can enhance their indirect procurement process's

efficiency, cost-effectiveness, and strategic value.

What is Contract Management?

Contract management is the process of managing agreements, from their creation to their
execution by the chosen party and the eventual termination of the contract.

Key activities involve performance analysis against the contract terms to maximize operational
and financial performance and to identify and mitigate financial and reputational risk through
non-compliance with contract terms.

Why is contract management important?

According to World Commerce & Contracting, 90% of business people need help understanding
contracts1.

Contract management is an important task for a business team. A solution to streamline contract
writing, processing, and storage allows businesses to meet legal and regulatory requirements
with ease.

It minimizes risk, protects both companies' interests, and can be a good resource in decision-
making and resolving disputes.

Having well-documented contracts that are executed quickly reduces costs and streamlines the
contract process while promoting positive vendor relationships.
Software solutions can automate certain actions in the management process, saving a company
time and money.

What is a Contract Lifecycle Management (CLM) process?

Initiation

This step involves identifying the need for a contract between two parties. In this discovery
phase, the scope of the agreement is established.

Authoring

The contract is drafted based on the terms and conditions defined by each business involved in
the agreement.

Process and Workflow

With an initial draft version in place, each party must examine the details of the contract. This
stage of the contract lifecycle will often involve internal collaboration with various departments.

Business operations, accounts payable, and legal may need to confirm that the agreement is
sound separately.

Negotiation

After a thorough review, one or both parties may need to make edits to the contract. All
differences must be addressed before a final document can be approved.

Approval

This stage in the lifecycle process of a contract can be where things slow down. Large companies
with multiple stakeholders with varying access and authority can make the approval process
complex.

Execution

After both parties approve the final contract, it is signed to put it into effect. Increasingly, these
signatures are electronic through a service like DocuSign.

Ongoing Management

Contracts are monitored for performance and to ensure both parties are meeting obligations. This
information is valuable when it is time to consider contract renewal or amendment.

How contract management works

Managing Service Delivery
This ensures that products are delivered as and when they are ordered.

Managing the Relationship

It involves strengthening the contact between vendor and purchaser to improve communication
throughout the contract management process.

Managing the Contract

The ongoing administration that ensures the day-to-day procurement activities follow what is
detailed in the agreement.

Seeking Improvements
Amendments and alterations are pursued within a procurement environment to improve
efficiencies and increase profits.

Ongoing Assessment
Procurement activities are assessed continuously to ensure that contracts are honored and that all
purchasing processes have been followed.

Managing Change
As part of a long-term procurement relationship, the changes in activities, requirements, or
products must be noted and handled effectively.

Managing Renewal or Termination

When a contract is due for renewal, contract management allows for taking proactive steps to
understand whether the contract should be renewed as is, re-negotiated, or terminated based on

Challenges of non-automated contract management

Lack of visibility

Not being able to see the details of every active contract leads to unintended auto-renewals at
unfavorable terms.

It can also lead to poor performance where one or both parties must comply with regulations or
contract terms.

Inefficient processes

Business processes that lack automation create an environment where manual intervention is
required to push the process forward through each step.

The contract lifecycle process tends only to stall if diligence is maintained. An automated system
is a second security level to back up busy contract professionals.

Human error
Human errors due to data entry mistakes or misplaced documents are minimized when a
centralized, cloud-based system is used to maintain contracts.

Manual contract renewal and revisions

The manual renewal and renegotiation of contacts can be labor-heavy. A digitized system
prevents timely reminders to review terms and allows renegotiation to remain unhurried and
based on actionable data like contract performance.

Limited communication

Contract partners may tend to limit communication over the lifecycle of a contract. The regular
reminders and task completion assignments that a contract management software solution
provides will encourage open communication between parties.

This could limit contract disputes and misunderstandings. Better supplier relationships will
result.

Contract management best practices

Standardize contract creation

Use a set of terms, conditions, and legal language that applies to many contracts.

Set contract management KPIs

Make your goals transparent to the entire business.

Track contract approval time

This allows an organization the advantage of:

 Receiving contracted goods and services sooner

 Ensuring a quicker move toward a positive relationship
 Creating an easier process for seizing later opportunities

Set automated reminders

Alert essential parties to review the document. This eliminates the risk of missing certain
addresses in group emails.

Review financial metrics

Dedicate part of the business’ regular contract management reviews to analyzing financial
metrics.

Conduct regular compliance reviews

This responsibility is necessary to protect the company against the risk of legal, industry, and
external regulations.
What is ‘good’ contract management?
Explore how contract management has changed over the past decades and what you should
expect from your system today.

Supplier relationship management meaning

The practice of supplier relationship management (SRM) originated in the 1980s as a way to
give companies a systematic and consistent strategy for assessing their suppliers. SRM’s roots
can be traced back to the work of the renowned procurement and supply chain analyst Peter
Kraljic, who introduced an innovative perspective on supplier segmentation. He developed
something called the Kraljic Matrix which essentially maps suppliers against two pivotal
dimensions: risk and profitability. For example, an electronics company needs both
microprocessors and office supplies, but the vendor that supplies them with the former is far
more essential to their success than the latter. For this reason, supplier relationship management
posits that while good interactions are important with all your vendors, it’s especially crucial to
cultivate robust, transparent relationships and ongoing assessment strategies with those suppliers
upon whom your business is the most dependent.

Modern supplier relationship management practices and solutions leverage analytical and
strategic components that can help businesses revolutionize their approach to managing vendor
relationships.

SRM vs. supplier management

The terms “supplier relationship management” and “supplier management” are often used
interchangeably, but they are not technically the same thing. Supplier relationship management is
just what it sounds like: the practice of managing relationships with suppliers. Supplier
management, however, is broader than that. It includes relationship management, but also
supplier information, performance, and risk management – as well as activities like forecast
collaboration.

As a term, SRM has been around a lot longer and is still used by many businesses, especially
small and midsize companies that don’t need the full functionality of an end-to-end supplier
management suite. Today, however, supplier management is the more modern term and is often
used to describe new and advanced cloud-based tools that meet the complex needs of upper
midmarket and large enterprises.
The supplier relationship management process
This is a circular journey, comprising five critical steps:
Supplier segmentation: This initial phase involves categorizing the supplier base. This helps to
deliver insights, highlight potential risks, uncover savings opportunities, and enhance supplier
relationships. Segmentation can occur based on various criteria such as item type, quantity, risk
(using the Kraljic matrix), location, price, sustainability, and more, depending on what holds the
most value for the business.
Supplier strategy development: Armed with the insights from segmentation, the next step is to
craft a tailored strategy. This involves negotiating contracts and prices, enhancing
communication processes, and attempting to diversify business across additional suppliers to
minimize risk and dependency.
Relationship building: This stage focuses on deepening your connection with suppliers. It
transcends transactions, fostering a relationship that includes end-to-end communication which
can include things like early notifications of price changes, promotions, and potential shortages.
Essentially, it ensures that your suppliers know you and are attuned to your business needs.
Strategy execution: Putting into action the tactics and initiatives identified during the strategy
development stage to enhance performance, drive value, and achieve the set objectives with each
segmented supplier group. It can encompass contract management, order fulfillment,
performance management, and proactive collaboration with suppliers to ensure that the strategic
goals are translated into tangible outcomes that benefit both the buying organization and its
suppliers.
Monitoring and continuous improvements: Continuous monitoring of supplier performance is
essential to effective supplier relationship management. This can include evaluating timeliness
and accuracy of deliveries, product quality, cost efficiency, lead time, and responsiveness.
Performance data feeds back into the cycle, informing the next round of segmentation and
strategy development, creating a loop that gets stronger and more illuminating each time it goes
around.
Goals and benefits of supplier relationship management
When you improve your ability to engage with your suppliers, you boost your opportunities for
success.
Closer relationships with suppliers: Building closer relationships with suppliers means
deepening your interactions beyond the transactional level. It involves forging partnerships and
building trust, mutual understanding, and shared objectives. This gives both you and your
suppliers a better understanding of each other’s goals, threats, and opportunities.
Lower costs: By understanding suppliers' operations and cost structures, businesses can work
with their vendors to identify areas for cost reduction without compromising quality. This can
lead to better price negotiations, bulk purchasing advantages, and reduced total cost of
ownership.
Reduced supplier risk: A well-implemented supplier relationship management strategy brings
greater awareness and real-time visibility - which helps you identify, assess, and mitigate risks
with greater speed and assertion. As the saying goes: You don’t know what you don’t know.
Leveraging smart procurement solutions and SRM practices ensures that you are more prepared
and confident.
Better supplier responsiveness: When your suppliers know you and feel invested in your
success, they are more likely to go the extra mile to meet your needs, especially in urgent
situations. This responsiveness can make all the difference in time-sensitive or unexpected
scenarios. The tighter the relationship between buyers and sellers, the greater the responsiveness.
Faster supplier collaboration: By providing your suppliers with digital and real-time methods
of collaboration and information sharing, you can react faster to disruption and improve business
agility. Often, this is done on a multienterprise supply chain business network – a many-to-many
B2B collaboration platform where buyers and sellers can connect, transact, and partner on shared
processes and information.
Greater visibility and transparency: Good supplier relationship management is transparent. It
clearly communicates performance metrics, their importance to all, and the fact that everyone is
subject to scrutiny. This no-nonsense, honest approach gives a good impression and encourages
suppliers to maintain high standards as part of their partnership with you, rather than simply out
of fear of surveillance.
Optimized value chain: By aligning supplier operations with your business objectives, supplier
relationship management strategies help to support an increasingly streamlined supply and value
chain. This ensures that from end to end, each link in the chain is visible, functioning efficiently,
and contributing to overall business success.
Insight into suppliers’ capabilities: With access to data and intel, you can better understand the
strengths, capabilities, and potential within your suppliers’ businesses. If you’re introducing new
products or business models, for example, you can assess whether your current supply base can
meet those needs – or if you need to find new suppliers. By grasping the capacity and limitations
within your supplier landscape, you can speculate and pivot with greater assurance and foresight.
Protecting against supply chain disruption
It took the catastrophe of COVID-19 for people to fully appreciate how dependent we all are
on supply chains. Aware of how close they’d come to the brink, the best businesses began to
aggressively optimize their supply chains and the systems and processes that run them. Part of
this has led to the urgent adoption of better supplier relationship management practices to help
navigate uncertainties with resilience and confidence. By cultivating strong supplier relationships
and maintaining continuous oversight, you can anticipate disruption and respond with agility.
Challenges of supplier relationship management
Even with strong supplier relationship management processes in place, there are still risks and
challenges to which you should always remain alert.
Lack of supplier diversity: Building great relationships with a small number of suppliers is
terrific for a lot of reasons. But there is always vulnerability and risk associated with having too
many eggs in one vendor’s basket. Fortunately, SRM software solutions can help to manage a lot
of the time-consuming, administrative elements of relationship management, leaving you free to
build new 1:1 relationships and bring on more vendors than you otherwise would have had time
for.
Misalignment: Sometimes suppliers can become competitors. Or their agendas and business
models can change to where you’re no longer aligned on terms and prices the way you once
were. This can be awkward when you’ve built close and friendly relations, so it’s essential to
anticipate these scenarios and build diplomatic communication and negotiation plans in case this
happens.
Obstacles to risk and continuity: From global politics to pandemics and weather crises, we’re
learning to “never say never” when it comes to the next potential supply chain event. Ensuring
excellent relationships with your suppliers is an essential buffer against uncertainty – but
unfortunately, it’s not a panacea. These days, it’s also crucial to double down with AI- powered
solutions and technologies to help you better grapple with data, see around corners, and put
contingency plans in place.
Visibility challenges: While supplier relationship management enhances visibility into supplier
operations, it is impossible to achieve complete transparency. Balancing trust with technological
aids like IoT sensors, blockchain, and GPS tracking can help in maintaining a clear line of sight
without encroaching on the supplier’s autonomy.
Supplier relationship management examples
Supplier relationship management strategies and solutions are helping these important sectors
manage their unique needs and issues.
Healthcare: From medicine to surgical equipment, product quality is literally a matter of life
and death in this sector. Supplier relationship management in healthcare often involves rigorous
vetting processes for suppliers, regular quality audits, and strict compliance checks to adhere to
healthcare standards and regulations. For example, a hospital could receive real-time alerts if a
supplier’s product has been subject to recalls or quality issues, enabling swift action to find
alternative sources and prevent potential harm.
Retail: With the pace of social media, fashion trends come and go – sometimes literally
overnight. Supplier relationship management in retail facilitates collaborative forecasting and
planning with suppliers to ensure that the right products are available when they’re hot and not
sitting around gathering dust once they’re not. For instance, a retailer of a high-priced, limited
edition item can work closely with suppliers to tailor their orders by region, ensuring supply
without surplus.
Energy: Utility companies are often dealing with assets that are decades old and require rare and
unusual parts and equipment to keep them running. Furthermore, they are facing mounting
pressure to reduce emissions and develop more robust sustainability measures. The old-school
parts suppliers and the modern high-tech vendors of smart power equipment have very different
practices and methods. Supplier relationship management can help utility companies centralize
and unify the way they manage these disparate types of suppliers – making sure they meet the
crucial energy needs of customers and remain compliant with sustainability standards.
Transportation: These companies depend on reliable equipment and timely delivery of
supplies. Effective SRM in this sector could, for example, involve closely managing
relationships with parts suppliers for vehicle maintenance, ensuring everything is available when
needed without carrying excessive inventory. A logistics company might use supplier
relationship management tools to evaluate the reliability of a diverse network of suppliers, giving
them the confidence to expand and diversify their business.
Construction: Businesses in this sector are under constant deadline pressures and must maintain
relationships with a dizzying variety of material suppliers. A construction firm could use supplier
relationship management software to track supplier performance across multiple projects,
identifying those who consistently deliver on time and meet quality specifications. This helps
them stay on track with both costs and timing.

How do you manage good relationships with suppliers?

Maintaining a good relationship with a supplier can be as easy as giving them the things you
want from your own customers: honesty, clear communication, reliability and, of course, on-time
payments. Getting to know their needs and capabilities while sharing your own can also deepen
relationships and reveal opportunities for productive collaboration later on.

What is the role of a supplier relationship manager?

Supplier relationship managers are charged with creating, managing and improving relationships
with an organization’s various suppliers. This involves frequent analysis and evaluation,
planning, negotiating, research and logistical execution.

What is the importance of supplier relationship management?

Supplier relationship management is aimed at improving the value of a company’s supply chain
and the consistency with which that value can be delivered. It can result in lower prices, faster
speeds, improved reliability, advance warning about unusual events (both good and bad), and
might even lead to fruitful collaborations.

What is supplier relationship management (with example)?

Supplier relationship management is the practice of evaluating suppliers and potential suppliers,
considering their current and potential value to your organization and making (and executing)
decisions that improve business value. For example, if you have two suppliers of an easily
acquired commodity, you might decide to give all your business to the vendor offering a better
price. On the other hand, you might decide that having only one supplier of an essential but hard-
to-find item for your business is too risky, so you decide to add another supplier to the mix to
create some redundancy.

What are the functions of supplier relationship management?

Supplier relationship management functions can differ from organization to organization, but the
process typically includes supplier segmentation (classifying your suppliers along different
dimensions and organizing them into useful frameworks), strategic planning, collaboration with
suppliers as would be useful, executing on the plans made, collecting data and learning from
experience to improve the performance and quality of the relevant supply chains, and iterating to
constantly learn and improve.
What are the types of supplier relationship management?

There are many ways to segment different types of SRM, but two main approaches that every
good supplier relationship manager must address are reactive and strategic management.
Strategic management is when you get to plan and make deliberate, calculated (often literally)
moves in the direction of setting up your supply chain as advantageously as possible. Reactive
supplier management happens in response to surprises, which could be adverse events (like a
supplier going out of business or failing to meet an obligation) but could also be a positive
change (such as a new innovation coming out that you hadn’t expected but that will
meaningfully improve your business and/or the lives of your customers).

What are the three basic components of supplier relationship management?

Supplier segmentation, strategic planning and execution are the three most basic steps in a
supplier management process. But for long-term success, it’s important to make sure you’re
working with suppliers collaboratively and iteratively to constantly learn and improve.

PPRA Rules Overview

Public procurement management in Punjab like in most developing countries needs a lot
improvement. Laws, Rules and Regulations are non-existent, inadequately implemented or
enforced. Capacity and morale of the work force are low whereas, accountability and
transparency on need basis. Public procurement practitioners face challenges from both external
and internal environments. The former include legal, political, economic and business and socio-
cultural environments. The latter is related to three factors: People who make procurement
decisions, procedures which provides guidance to the practitioners; and controls which ensure
probity, transparency and accountability. In order to deal effectively with the challenges an
adequate and independent audit mechanism should be formed that manages to balance between
the financial and performance audit.

In Pakistan current procurement regime started functioning in 2002 when the Government of
Pakistan created PPRA at Federal level through a presidential ordinance. The system was
strengthened by adding Public Procurement Rules 2004 and Public Procurement Regulations
2008. The Punjab Province adopted the system in 2007 through an ordinance which was under
the same nomenclature was converted into an Act 2009. Punjab Procurement Rules 2009 (PPR-
09) were also notified in the same year to beef-up the procurement system in the province. The
enforcement of Law/Rules however, remained passive due to absence of proper office of the
Punjab Procurement Regulatory Authority. The enforcement of any Law/Rule requires its proper
awareness and orientation. In order to achieve an extensive capacity building, a program has
been launched ambitting all the Public Sector Organizations down to Town Municipal
Administration level. A high power committee under the Chairpersonship of Additional Chief
Secretary, Punjab has been constituted to revisit the Public Procurement Laws/Rules so as to
bring them inconformity with the Public Sector Organization’s Requirements without a straying
from the International best practices. Four new procurement related Rules/Documents such as
Procurement Regulations, Code of Ethics for Public Procurement, Public Procurement Checklist,
Public Procurement Consultancy Service Rules, Draft Standard Bidding Document and Draft
Contract Agreement are under consideration with the forum (Planning & Development
Department).

Increased expenditure and quantum of procurement has created an opportunity for corruption and
waste public procurement. In order to vitiate and minimize the chances of the malpractices, the
proposed Rules and Regulations have been drafted. The main focus of these Laws would be to
ensure transparency and accountability as these are the key inducement to individual and
instructional probity, a key deterrent to collusion and corruption, and a key prerequisite for
procurement credibility. The salient features of the current procurement system include a
regulatory body mandated to monitor the public procurement activities, legal framework
elaborating a mechanism as well as procedure on public acquisition of goods, works and services
by the public sector enterprises, establishment of grievance redressal/appeal mechanism
exclusively for settlement of complaints on the contract management issue, a mechanism for
wide dissemination of Government policy decision, procurement opportunities and results of
evaluation exercises for award of contracts and regulatory arrangements for ensuring access to
information on the public procurement system.