Procurement and Supply Processes
The sourcing cycle
Identify the need → define the specification → develop a sourcing strategy → identify and shortlist suppliers → evaluate → negotiate → award contract → manage the contract → review and dispose.
Key tools
- Specification - conformance specifications state exactly what is required; performance specifications state the outcome and leave design to the supplier.
- Market tools - RFI gathers information with no award; RFQ seeks prices for a clearly defined item; ITT is a formal tender; RFP invites proposals or solutions.
- Evaluation - award criteria published in advance, weighted scoring, a moderated panel and recorded rationale.
- Purchase to pay - requisition → purchase order → goods receipt note → invoice → three-way match → payment.
- Contract management - KPIs, SLAs, review meetings, change control and an exit plan.
Traps
Mixing up RFI and RFQ is very common. 'Lowest price wins' only applies if the published criteria say so. Skipping or writing a vague specification causes disputes later. Also remember the three-way match must reconcile purchase order, goods receipt and invoice before payment.
Rule of thumb
Weighted score = sum of (score × weight). With quality weighted 60% and price 40%, a bidder scoring 8/10 on quality and 6/10 on price scores (0.6 × 8) + (0.4 × 6) = 7.2. A second bidder scoring 6 and 9 also scores 7.2. Always agree a tie-break rule, such as a minimum quality threshold, before evaluation begins.