The Procurement Cycle demonstrates all the processes, responsibilities and risks used in each stage of a procurement to purchase goods, services, and works.
The Procurement Cycle Broken Down
Stage #1 – Analyse Needs: Be transparent with the suppliers, stakeholders, and employees inside your organisation to understand what is needed. Carry out research into the marketplace to determine and understand what you’re looking for. Develop an understanding of what the suppliers can provide with the principles of social value and social value benefit at the core of the decision making.
Stage #2 – Plan Benefits: Look to design and plan the procurement based on what is needed by your organisation. The planning stage of your procurement is based on what you have learnt during the analyse stage. During the planning stage, you’ll be writing a specification and dependent on your procurement requirements depends how detailed your specification will be. For unique and complicated procurement requirements such as construction builds your specification will be quite detailed, however for more commonly procured goods, works and services your specification maybe simple. Whilst writing your specification you may need to ensure your suppliers are aware of various values and policies they may need to adhere to such as fair trade or environment policies as well as drafting your specification to ensure it doesn’t exclude or favour specific suppliers.
Your specification will not only include details, but timings, expectations, how you foresee the creation of social benefits as well as the terms and conditions suppliers would have to follow to.
A further decision you’ll have to consider during the plan stage is how to evaluate the offers that you will receive from your suppliers and how you’ll balance considerations of price and quality. There are numerous approaches to evaluating quality, which is the most suitable depending the goods, services and works you’re procuring. However, all approaches provide the opportunity to the supplier to answer questions so that they can explain how their offer satisfies your requirements.
Finally during the plan stage, you’ll consider how to evaluate the price. The price is evaluated relative to another price and the score for this expressed as a percentage (a common method being each price is evaluated against the lowest price received). Alternatively, price can be evaluated against another target price or a ceiling price put in place, therefore any price above that price is either disqualified or penalised in the evaluation.
Stage #3 – Procure: The third stage of the procurement cycle is to conduct your procurement based on what you have planned during the Plan stage of your procurement. If you’re purchasing ‘off-the-shelf’ goods, services or works you’ll most likely go straight your supplier. If you’re requesting quotes, you’ll issue these directly to suppliers, where as if you’re issuing a tender, you’ll need to advertise this.
Promoting your procurement can be done through advertising on your own website, publications, trade, press and trade association or membership sites and of course through online tendering portals, Contracts Finder and Find a Tender service. Your adverts should contain details of your procurement, the process and the timescales within which the suppliers must respond. Ensure your suppliers can access documents and submit their offers, and that you can answer questions from suppliers and publicise your answers.
You will l need to evaluate suppliers offers to determine which offer is the best to meet your needs. It’s pivotal that you do this fairly and without bias, make sure you keep accurate records of your decision as to ensure you provide details required for approval and justifying your decisions.
Once you’ve determined the best offer, you should let all suppliers know the result and which supplier has been awarded the contract. It’s important to keep suppliers informed and up-to-date about the processes and outcomes, as suppliers have invested their time and effort in submitting an offer and should always be treated with respect. Not only this, but this will create a good reputation for your organisation and encourage suppliers to take time to tender against your procurement requirements in the future.
Suppliers may ask for information and feedback regarding your decision. Providing feedback will help suppliers improve their response in the future and support smaller and new organisations grow and make sure that you have a pool of suppliers to choose from in the future. Most importantly when providing feedback care should be taken not to disclose confidential information about the other offers received.
Stage 4 – Manage Benefits: The final stage of the procurement cycle is to manage your procurement. You will need to formally award the contract to the winning supplier. This process will involve discussing how you will put the winning supplier’s offer into practice, confirming specifics around any orders, delivery arrangements and meetings to discuss the contract. For complex procurements you’ll want to confirm how you will both collect and share information that you both need to manage the delivery of the goods, services or works.
The information and approaches should be designed so that you assess that satisfactory levels of quality have been achieved throughout the procurement and that the pricing remains consistent with what has been agreed.
Finally, once the contract is nearly at it’s expiry, you’ll need to decide whether you still require the goods, services or works. If not, you will need to plan a logical exit from the contract however if you do still require the goods, services or works, you will need to begin the process again to reprocure what you need.
To effectively implement social value into your procurement, discover how the Socially Purposed Procurement cycle works and the 8 principles of social value.
The procurement cycle is the foundation that all procurement in based on. Value Match is a procurement-based organisation and offers a wide range of procurement, bid management and training services. Our CPD accredited online training course; Procurement Fundamentals dives deeper into the procurement cycle and legal framework of procurement, discover more here.
