Procurement Life Cycle: Understanding the Procurement Process

Procurement life cycle is the process of acquiring goods, services or works, from the procurement planning stage to the contract management stage. It involves defining requirements, identifying potential suppliers, evaluating bids, awarding contracts, and managing the contracts. The procurement life cycle is an essential process for many organizations, and it ensures the purchase of goods or services at the best possible value with the necessary quality and within the stipulated timeline.

Planning Stage:

The procurement process starts with the planning stage, which involves identifying the organization's needs, developing specifications, and determining the estimated budget. The procurement plan should include considerations such as delivery time, payment terms, and quality standards.

Sourcing Stage:

The next stage of the procurement life cycle is the sourcing stage, which involves identifying potential suppliers, inviting bids, and evaluating proposals. The evaluation process considers a range of factors, such as price, quality, delivery time, payment terms, and supplier capacity.

Negotiation Stage:

Once the bids are evaluated, the negotiation stage follows, where the buyer engages in negotiations with the potential suppliers regarding the contractual terms and conditions. Negotiation aims to ensure that the best possible terms and conditions are agreed upon.

Contract Award Stage:

The contract award stage is the stage where the selected supplier and buyer sign the contract. The contract states the terms and conditions agreed upon by both parties, including the product or service requirements, delivery time, payment terms, and any other relevant terms.

Contract Management Stage:

The final stage of the procurement life cycle is the contract management stage, where the buyer and supplier implement and monitor the contract's terms and conditions. It involves activities such as tracking the supplier's progress, managing change orders, monitoring performance, resolving disputes, and evaluating the supplier's performance.

Conclusion:

In conclusion, the procurement life cycle is a vital process for any organization purchasing goods, services or works. The procurement process includes procurement planning, sourcing, negotiation, contract award, and contract management stages. It ensures that the organization acquires the best value for money while meeting the necessary quality and timeline requirements. A successful procurement life cycle depends on identifying the organization's needs, developing specifications, and managing contracts effectively to ensure the procurement process runs smoothly.

References:

1. Government of Canada. (2018). Procurement Lifecycle. Retrieved from https://www.tpsgc-pwgsc.gc.ca/app-acq/lc-pl/lc-pl-eng.html.

2. Procurement Leaders. (2021). The Procurement Life Cycle: In-depth Guide. Retrieved from https://www.procurementleaders.com/guide-to-procurement/the-procurement-lifecycle-in-depth-guide.

3. King, M. (2019). Understanding the Five Stages of Procurement. Procurement Academy. Retrieved from https://www.procurement-academy.com/stages-of-procurement/.

4. Edwards, T., & Lewis, J. (2017). Procurement. In J. Lewis, T. Edwards, & D. Pedersen (Eds.), Project Management in Practice (pp. 192-209). Open University Press.

5. Lamond, D. (2019). Procurement Planning: Key to Success in Procurement. Procurement Bulletin. Retrieved from https://www.procurementbulletin.com/procurement-planning-key-to-success-in-procurement.

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