6 Procurement Methods You Need to Know

The procuring department is responsible for acquiring goods and services for a business. This may involve shopping for goods at competitive prices, handling all legal procedures associated with obtaining a contract, budgeting costs for the goods and studying financial trends to ensure that company money is being spent wisely.

Choosing which suppliers a business will use isn’t as easy as it sounds. A good sounding product and a good price doesn’t necessarily mean it’s a green light for signing on a new supply customer. So what methods does a procurement team member use during the selection process?

Procurement Methods

Generally speaking, there are six procurement methods used by the procurement team in a company. The actual names of these could vary depending on your company and industry, but the process remains the same. The six types of procurement are open tendering, restricted tendering, request for proposal, two-stage tendering, request for quotations and single-source procurement.

1. Open Tendering

Open tendering is shorthand for competitive bidding. It allows companies to bid on goods in an open competition or open solicitation manner. Open tendering requirements call for the company to:

1. Advertise locally
2. Have unbiased and coherent technical specifications
3. Have objective evaluation measures
4. Be open to all qualified bidders
5. Be granted to the least cost provider sans contract negotiations

Arguably, the open tendering method of procurement encourages effective competition to obtain goods with an emphasis on the value for money. However, considering this is a procedures based method a lot of procurement experts feel that this method is not very suitable for large or complex acquisitions due to the intense focus on the output process instead of stringent obedience to standards.

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