Procurement

[Virtual Presenter] The procurement process involves several stages that need to be managed effectively to ensure efficient delivery of goods and services. The first stage is Pre-Purchase Governance, which includes setting clear policies and procedures for procurement, defining roles and responsibilities, and establishing a system for tracking and monitoring progress. This stage sets the foundation for the entire procurement process. Next, Purchase Requisition Creation is the second stage, where requests are made for goods or services needed by the organization. These requests must be properly documented and approved by authorized personnel before they can move forward. Comparative Statements are used to compare prices and features of different suppliers and products. This stage helps organizations make informed decisions about which suppliers to work with and what products to purchase. Purchase Orders are issued to confirm the details of the purchase, such as quantity, price, and delivery date. Once the purchase order is received, it triggers a series of events that ultimately lead to the delivery of the goods or services. The final stage is the actual delivery of the goods or services, which may involve multiple stakeholders and teams working together to ensure timely and cost-effective delivery. In addition to these stages, there are other key elements that play a crucial role in the procurement process, such as contract management, inventory management, and supply chain optimization. Effective management of these elements is critical to ensuring that procurement processes run smoothly and efficiently. By streamlining procurement processes and improving overall performance, organizations can achieve significant benefits, including reduced costs, improved quality, and increased customer satisfaction..

[Audio] The purpose of this stage is to ensure that Purchase Requisitions are accurate and complete, eliminating errors that could occur later in the procurement process. This stage involves several key actors working together to validate the Purchase Requisition against the approved budget and execution strategy. The activities performed here include verifying the Bill of Materials against the contract scope, finalizing specifications, and locking in a budget ceiling for each procurement package. This helps to prevent overruns and ensures that costs are controlled. The output of this stage is a well-validated Purchase Requisition that is ready for formal creation. The key principle to understand here is that the Purchase Requisition is a commercial authorization, not simply a copy of the Bill of Materials. The budget is a fixed amount, and quantities can vary within approved limits. All commercial decisions require approval from senior management, while the procurement officer is responsible for executing payments. Minor adjustments can be made using Purchase Order amendments..

[Audio] The Purchase Requisition is created by the Requisitioner, who acts as the Gatekeeper. This individual is responsible for ensuring that all necessary information is included in the PR, such as the item or package name, the approved budget ceiling as a hard limit, and a reference unit rate used only for estimation and benchmarking purposes. Additionally, a quantity band is added to allow for technical flexibility during sourcing. The delivery requirements and agreed payment model are also clearly defined in the PR. Furthermore, it's essential to note that the Bill of Materials (BOQ) is copied into the PR solely as a reference document, rather than being used as a direct purchase instruction. The indentor plays a crucial role in validating the PR against both the approved budget and the execution strategy before submitting it. This process helps avoid poorly crafted PRs and ensures that controls are properly implemented. The PR is then reviewed and finalized by various stakeholders, including the engineering/project team, marketing, finance, and the Requisitioner. Once clean and budget-locked, the PR is ready for creation..

[Audio] The Purchase Requisition (PR) is created by the Indentor and submitted to the Head of Procurement for approval. The PR contains essential information such as the item or package name, the approved budget ceiling, and the reference unit rate. The PR also includes the delivery requirements and payment model. The Indentor validates the PR against the approved budget and execution strategy. The Requisitioner creates the initial document and ensures its accuracy. The PR is reviewed and approved by the Head of Procurement, who verifies its accuracy against the approved PR and Comparative Statement. Once the PR is approved, the Purchase Order (PO) is drafted by the procurement team, referencing the approved CS number and ensuring that the PO quantity does not exceed the PR budget ceiling. Minor adjustments can be made through amendments to the PO without requiring additional approvals. The PO is then released to the supplier and finance, and the procurement process continues..

[Audio] The Purchase Requisition (PR) is approved by the Project or Department Head, Finance for budget lock confirmation, and by DMD or MD depending on the value of the PR as per Delegation of Authority. The governing policy at this stage is very clear: “Budget ceiling is approved. Quantity variations are allowed only if the total spend remains within the approved ceiling.” Once approved, the PR is approved only once. There is no re-approval required for minor quantity changes as long as the total value remains within the budget ceiling. The KPI for this stage is strict — PR approval must be completed within two days..

[Audio] The procurement team will review the submitted quotations from the vendors and evaluate them based on the criteria established by the procurement policy. The evaluation criteria may include factors such as price, quality, delivery time, and compliance with specifications. The procurement team will then select the vendor that meets the required standards and provides the best value for money..

[Audio] The process for evaluating technical data involves several key steps. First, the engineering team reviews the provided datasheets and brochures. These documents contain information about the products or services being evaluated. The review is conducted in a blind manner, meaning that the team does not have access to pricing information or supplier names. This helps ensure that the evaluation is fair and unbiased. Next, the team assesses the technical merits of each product or service. They evaluate the data based on specific criteria, such as performance standards, safety features, and environmental impact. The goal is to determine whether each product meets the necessary technical specifications. Once the evaluation is complete, the team generates a technical compliance sheet. This document provides a summary of the results, indicating whether each product has passed, failed, or been scored based on its technical performance. The sheet also includes any relevant comments or recommendations. This process is critical to ensuring that the selected products meet the required technical standards. By conducting a thorough and objective evaluation, the team can identify the most suitable options for the project..

[Audio] The process begins when procurement prepares the Comparative Statement, which includes a full commercial comparison and technical compliance information. This statement is then evaluated by the SCM team, who assess its content and ensure it meets all necessary criteria. Once the statement has been reviewed, it is submitted to the appropriate level of management for final approval. The SCM manager, director, or managing director will review the statement and provide their approval, usually within a two-day timeframe. This approval allows the procurement team to move forward with creating the purchase order. The procurement team typically completes this task within one day after completing the technical evaluation. The purchase order is then created and released to the supplier and finance department. Throughout the entire process, the procurement team works closely with the supply chain management team to ensure seamless communication and efficient execution..

[Audio] The process begins when the Comparative Statement is approved, triggering the creation of a Purchase Order by procurement staff within a maximum of twenty-four hours. This order is then reviewed and verified by the Head of Procurement, ensuring its accuracy against the approved PR and CS. The PO is then issued to the supplier and finance simultaneously, adhering to the approved budget ceiling and delivery requirements. Minor adjustments can be made through amendments without requiring further approvals..

[Audio] The financial team executes the commercial terms of the contract, ensuring that the project stays on track and that all parties involved are aware of their obligations. They work strictly according to the terms set forth in the original purchase order, without revising or reinterpreting any procurement decisions. The financial team's responsibilities can be summarized into three key areas: advancing payments, managing liquidity through letters of credit or bank guarantees, and paying milestones. These actions ensure that the project stays on track and that all parties involved are aware of their obligations. By executing the commercial terms of the contract, the financial team plays a crucial role in maintaining the smooth flow of the project. The financial team does not deviate from the plan laid down by procurement and sticks to the agreed-upon schedule..

[Audio] The company will provide a comprehensive list of all items included in the procurement review, which includes the item name, description, and price. This information is used to calculate the total spend. The company will also provide a detailed breakdown of the costs associated with each item, including labor costs, material costs, and overheads. This information helps us understand the true cost of each item and make informed decisions about future procurements. The company will also provide a comparison of the current procurement review with the previous one, highlighting any differences between the two reviews. This comparison allows us to identify trends and patterns in our spending habits, helping us to optimize our procurement processes. In addition, the company will provide a summary of the total spend, including the total amount spent and the percentage of the approved budget ceiling that was exceeded. This information is critical in determining whether the procurement review requires a full approval or a fast-track process..

[Audio] The goods receipt notes or service entry sheets are used to document the delivery of goods or services. These documents are completed by the person receiving the goods or services, such as the warehouse staff or the end-user. The completion of these forms is essential to ensure accurate tracking and recording of the goods or services received. Once the goods or services have been delivered, finance will release payment only after verifying that the goods or services were indeed delivered and that they meet the specifications outlined in the purchase order. This verification process involves a three-way match between the purchase order, the goods receipt note or service entry sheet, and the supplier's invoice. The three-way match ensures that all parties involved in the transaction agree on the details of the delivery, including the quantity, quality, and price. By conducting this match, we can minimize errors and discrepancies in the payment process. In addition to the three-way match, there may be other requirements for releasing payment, such as ensuring that the goods or services were delivered within the specified timeframe. However, the three-way match provides a critical foundation for verifying the accuracy of the payment process. By using goods receipt notes or service entry sheets and conducting a three-way match, we can streamline our procurement processes and improve the efficiency of our payment system. This helps us to reduce costs and minimize delays in getting paid for goods and services purchased..

[Audio] The procurement process is highly regulated and controlled. The controls and audit trail in place ensure that procurement processes are executed efficiently and effectively. The budget ceiling is strictly enforced, preventing any potential overruns or discrepancies. The maintenance of a change or delta PR register allows for quick identification and management of any variations. Tracking and monitoring of quantity deviations enables timely adjustments to be made. A comprehensive audit trail is maintained through referencing the approved comparative statement in every purchase order. This provides transparency and accountability. Tying client-approved variations to corresponding budget increases ensures financial discipline and compliance..