The Procurement Process in MM can be defined as a process to acquire goods in the right amount at the right price when it is expected. It needs to manage a fragile balance of the requirement, the costs and the timing with the objective of managing minimum inventory and acquisition of the inventory at the minimum possible cost.
The basic Procurement Process can be explained in following steps –
- Determine what good and services are required at what expected cost and by when.
- Raise a requisition with purchasing department explaining the requirement with adequate details.
- Once approved, the requisition proceeds to create a purchase order.
- After the purchase order is fulfilled, good receipt happens along with invoiced receipt with respect to the purchase order item list.
- After goods are validated for quality and quantity, the invoice is verified for inconsistencies and post verification all payments are made.