Have you heard the term procurement, but never quite understood what it is? Well then you’re in luck, because this article is for you! In this article, we detail the definition of procurement, the meaning of procurement, why it is important, the key components of a procurement process, and where you can find procurements to bid on. So, let’s get started!
The meaning of procurement
Procurement is a process of acquiring goods, services, or works from an external source. Simply put, it’s a structured way of buying something that large organisations use. Public organisations are required to use a procurement process when buying above a certain value threshold.
Why are procurements used?
Procurement is an important process that many public and private organisations use for their purchasing needs. By effectively managing procurement, companies can achieve several benefits:
- Cost savings: Through strategic procurement practices, companies can negotiate better deals, bulk discounts, and identify cost-saving opportunities.
- Quality control: By carefully selecting suppliers and conducting thorough evaluations, companies can ensure the quality of goods or services procured.
- Transparency and fairness: Competitive tendering promotes transparency as it provides a level playing field for all suppliers involved. The process is based on objective evaluation criteria, ensuring fairness and equal opportunities.
- Limiting risk of corruption: A procurement process makes the buying process more transparent and thus less susceptible to corruption.
- Innovation: Engaging with new suppliers through procurement can introduce innovative solutions and drive business growth.
Key steps of a procurement
A procurement process typically consists of several key steps that guide the entire lifecycle of acquiring goods or services. Understanding these components is essential for anyone involved in responding to tenders:
1. Needs are identified
First, the buyer identifies their needs. This involves determining what goods, services, or works are required and in what quantity.
2. Market research
Once the needs are identified, the buyer does market research. This step involves gathering information about potential suppliers, their offerings, costs, and any specific requirements, so that they can create a tender with relevant requirements. As a supplier, it can be beneficial to reach out to organisations in this phase, to inform them about your services and how they differ from other options on the market.
3. A tender is published
Based on the market research, the buyer publishes a tender. The tender documents describe the buyer’s needs, detailed information on the project, how to submit a proposal, evaluation criteria, etc.
4. Bidding ensues
Suppliers respond to the tender with their bids. The bid demonstrates their understanding of the buyer’s requirements and provides a detailed explanation of how they will meet those requirements. The buyer evaluates and selects the winning supplier.
5. Contract is negotiated
Once a supplier is selected, negotiations take place to finalise the terms of the contract. This includes pricing, delivery schedules, payment terms, and any other relevant conditions.
Where to find procurements
If you want to participate in procurements as a supplier, you might be wondering where to find procurements to bid on. There are, in fact, several places where you can find them.
One common source is government websites, as public organisations often post their tenders there to ensure transparency and equal opportunity for suppliers. The European Union, for example, has its own database of tenders in the EU. Additionally, many private organisations also publish their tenders on their websites or on dedicated procurement portals. Business networks and associations can also provide information about upcoming tenders.
Many suppliers use tender monitoring services to avoid having to manually check many different sources. A tender monitoring service notifies you when a new tender in your search profile has been published. With Tendium’s smart monitoring tools, you can find more tender opportunities faster, so you can focus on writing a good tender response.
Participating in procurements
Procurement is an important aspect of business operations – and so can bidding on them be.
Here at Tendium, we strive to simplify the process of participating in procurements, making it accessible and efficient for suppliers of all sizes. Our platform is designed to save time, enhance the quality of proposals, and ultimately increase the success rate in winning procurements.
So, whether you are new to procurement or experienced in responding to tenders, embracing technology and leveraging AI can undoubtedly give you a competitive edge. Good luck!
