There are four key processes involved in product procurement management:
1. Planning procurement
Planning procurement involves a series of steps that help determine which resources an organization needs for project completion and the extent of its budget. Project procurement managers often consider the following aspects when planning for procurement:
- The materials and resources required to complete the project.
- The materials and resources they already have, and which need to be outsourced.
- Contract requirements for outside purchases
- Delivery date requirements
- Key project milestones and their deadlines
- Legal terms and conditions
- Industry safety standards of materials and resources
- Researching providers and vendors
- Criteria for partnerships
Most often, managers use a written document as a project procurement plan that addresses the above considerations and details any other important information, such as how to handle changes in delivery dates or contract terms.
2. Conducting procurement
After planning for procurement, project procurement managers assess bids from vendors and select partnerships based on their project needs. Any vendor negotiations often take place during this phase of procurement and all involved parties sign the agreed-upon contracts. Project procurement managers may also make payments for products and services at this time.
3. Controlling procurement
Once contracts become active, procurement control and management are important parts of maintaining partnerships with vendors and ensuring the services and products function as they’re intended throughout the course of the project. Controlling procurement often includes:
- Evaluating regular internal status updates
- Reviewing contractor agreements
- Reviewing progress and performance updates from vendors
- Conducting inspections and audits
- Assessing work orders
- Issuing additional payment as necessary
4. Closing procurement
Closing procurement involves all necessary steps in ending a partnership or contract. This often involves a review of the work or services completed, renegotiation of any changes to original contract terms and confirmation of payments issued and received. Organizations may also file a formal release of liability upon procurement closing. This contract confirms that the vendor has fulfilled the terms of the original contract and is no longer responsible for any additional involvement in the project.