For fresh graduates in management and accounting or professionals looking for a career switch, procurement is often an attractive field. Since it plays a crucial role in business operations, this position offers promising career prospects. However, many people still confuse procurement with purchasing.
What is Procurement?
Procurement refers to the process of acquiring goods or services necessary for a company's operations. Unlike purchasing, which focuses on the transaction process, procurement covers the end-to-end purchasing cycle. This includes: needs analysis, vendor selection, price negotiation, and purchase documentation.
Given the broad scope of procurement and the increasing role of digitalization, both employees and companies need to recognize the importance of digital literacy and security. Understanding the risks in the digital landscape is the first step in protecting corporate assets.
Since procurement involves the entire purchasing process, its tasks are divided into multiple stages.
Procurement Process and Responsibilities
Procurement starts with analyzing company needs and moves through various steps, each with its own challenges.
1. Recording and Requesting Company Needs
Before making purchases, conducting a needs analysis is crucial. Procurement teams record requests from different divisions, aligning them with budget constraints and company priorities.
Once validated, a purchase request (PR) is submitted, detailing: Item/service type, quantity, and specifications.
2. Vendor or Partner Selection
After approval of the purchase request, the vendor selection process begins. Vendors are evaluated based on credibilty, product quality, and experience. Assessing proposals and legal documents ensures compliance and authenticity, reducing risks for the company.
3. Price Negotiation and Agreement
Even after vendor evaluation, negotiation is necessary to achieve the best deal without compromising quality. Discussions cover several matters such as final price, delivery schedule, payment terms, legal condition, and service warranties.
4. Purchase Order (PO) Documentation
Once the agreement is finalized, the company issues a Purchase Order (PO). Similar to a PR, this document serves as an official procurement record and legal reference for vendors. It includes detailed order specifications, prices, and delivery schedules.
5. Verification and Goods Acceptance
Upon receiving the order, the procurement team conducts verification and inspection to ensure compliance with the Purchase Order (PO), the requested quantity, and the expected quality
6. Payment Processing
Payments are made once the order is officially received. The process includes re-verification of vendor invoices and on-time payments (either full or installment-based). Timely payments help maintain strong relationships with vendors.
7. Procurement Documentation
After completing the procurement cycle, proper record-keeping is essential. All procurement-related documents, including purchase Requests (PR), purchase Orders (PO), vendor invoices, inspection reports, goods receipt records, and proof of payment. These records simplify future audits and legal references.
Types of Procurement
Understanding procurement processes also means recognizing different procurement types:
1. Official Procurement
This category includes:
- Strategic Procurement: Long-term planning or large contracts requiring formal procedures.
- Service Procurement: Legally binding service contracts, such as consulting or legal services.
2. Non-Official Procurement
More flexible and less regulated, including:
- Direct Procurement: Smaller purchases that don’t require formal tendering.
- Indirect Procurement: Purchases supporting daily operations, like office supplies or cleaning services.
- Service Procurement: Acquiring advertising services or management consulting.
Since procurement involves various steps and document approvals, teams often face challenges like managing large volumes of procurement documents and multiple approvals requiring signatures. The good news is digital signatures now offer a faster, easier, and safer solution.
Digital Signatures: Accelerating and Securing Procurement Workflows
The procurement process often slows down due to manual signatures. These traditional methods delay the workflow and create administrative complexity. Beyond administrative inefficiencies, cyber fraud is on the rise. According to VIDA’s Whitepaper, 67% of fraud cases involve contract forgery. It means using wet signatures increases the risk of document forgery and unauthorized modifications.
With encryption technology, digital signatures ensure that only authorized personnel can access and sign documents and sensitive company documents remain tamper-proof.
Adopting digital solutions like VIDA Sign streamlines procurement workflows, offering:
✔ Faster Approval Process
- Eliminates manual delays and enables instant approvals.
✔ Higher Security
- Legally recognized encryption prevents document fraud.
- Ensures signatures cannot be altered.
✔ Operational Efficiency
- Reduces reliance on physical paperwork.
- Lowers printing, shipping, and storage costs.
- Automates approval workflows for greater accuracy.
The procurement process is critical for company efficiency but is often slowed down by manual approvals and document management challenges.
By using VIDA Sign, procurement teams can speed up approvals, enhance security, and reduce administrative burdens.
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