Additional Points to Consider
In addition to the well-defined steps outlined here, there is considerable communication that takes place throughout the process, with numerous touchpoints. Procurement procedures that are created by the company provide the framework for where the work gets accomplished and remind us that communication must remain open and clear.
In the case of equipment purchases, extra considerations include whether the items will be purchased outright (with warranties or service agreements, or without) or leased (which is similar to being rented over a set period of time, but with benefits to the procurer like service agreements or trade-in value). As well, equipment can be acquired as new or used.
Equipment purchases tend to take place every few years and may require more authorization levels or steps than other purchases. Lead time (the amount of time it takes between deciding that a piece of equipment needs to be purchased and then being able to receive it) is of particular importance in equipment purchases, since some items have to be specially manufactured or acquired from great distances.
In the case of purchasing services, there is a veritable tsunami of outsourcing available. In addition, expenditures involving services by private, not for profit, and government organizations continually increase. It’s not unusual for services procurement to make up more than 25% of expenditures. (Services can include software development, engineering, promotions and marketing, equipment maintenance and repair, food and hospitality services, and janitorial care.) Instead of selecting suppliers, the company may issue a request for proposals and consider multiple proposals before initiating the purchase through a well-defined statement of work.