The three procurement components

Three key elements work together to make the procurement process happen: People, Process, and Audit.

People 

People are usually responsible for initiating or approving each step of the procurement process. In addition to procurement specialists, the people involved include other stakeholders, such as the auditor and the business departments requesting the goods and services. The number of people involved often depends on the value of the goods and services; additional stakeholders may be interested in scoring and approving high-value purchases.

Process 

An effective procurement process can help an organization succeed by keeping procurement costs down and ensuring supply. A planned and systematic approach helps promote accuracy and punctuality because everyone involved knows precisely what they need to achieve and how long they have to complete the tasks. Conversely, a confusing procurement process leads to inefficiencies and potentially costly mistakes. Overpayments, for example, can affect profitability, while late payments negatively affect supplier relationships.

Audit 

It is essential to keep records for each step of the procurement process and ensure they are easily accessible. These records act as a repository of organizational knowledge about payment terms and supplier performance and help the business maintain an efficient procurement process – even if the procurement team changes over time. In the event of an audit or dispute, a company must be able to easily follow the trail (paper or electronic) at each stage of the procurement process.