What is the Procurement Approval Process: Detailed Guide

The procurement approval process is a crucial step in the procurement cycle. It ensures that all purchases made by an organization are authorized and comply with company policies and procedures. In this article by Viindoo, we'll take a closer look at the process of procurement approval and its importance.

What is the Process of Procurement Approval?

The procurement approval process is the process that organizations use to obtain approval for purchases that they intend to make. The process typically involves several steps, including identifying a need, requesting a quote, obtaining quotes, and obtaining approval from a designated authority. Once approved, the purchase can be made.

procurement approval process

Procurement approval matrix

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Why is the Procurement Approval Process Important?

The logical process of procure approval is important for several reasons, including:

Ensuring Compliance with Company Policies and Procedures

Many organizations have specific policies in place for procurement. There can be restrictions on the types of purchases that can be made, the maximum amount that can be spent without approval, and the preferred vendors to be used. 

By having a standardized process in place, organizations can ensure that all purchases are authorized and comply with their policies. This not only helps organizations to manage their procurement activities effectively but also ensures that they remain in compliance with all applicable regulations and laws.

Controlling Costs and Budgets

By having a designated authority approve all purchases, organizations can ensure that they are spending their money wisely and that all purchases are necessary. It can also help organizations to manage their budgets more effectively by ensuring that all purchases are tracked and accounted for. This information can then be used to identify areas where costs can be reduced, such as through negotiating better deals with vendors or consolidating purchases.

Improving Efficiency and Productivity

With a standardized process in place, organizations can streamline their procurement activities, reducing the time it takes to complete a purchase. This can help to free up valuable resources, such as staff time, which can then be used for other critical tasks. Additionally, a streamlined procurement process can help to reduce errors and mistakes, ensuring that purchases are made accurately and efficiently.

Ensuring Transparency and Accountability

A clear procurement approval workflow helps ensure transparency and accountability. By having a designated authority approve all purchases, organizations can ensure that all purchases are recorded and there is a clear audit trail. This information can be used to identify any potential issues or irregularities, ensuring that all procurement activities are transparent and accountable.

procurement approval process

The logical process of procure approval is important

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The Procurement Approval Workflow: Step-by-Step

The process of procurement approval typically involves several steps. While the specific steps may vary depending on the organization, the following is a general overview of the process:

Step 1: Identify the Need​

The first step in the process is to identify the need for the purchase. This can be done by a department or an individual. It is essential to determine whether the purchase is necessary, and if so, what specific product or service is required.

Step 2: Request a Quote

Once the need has been identified, a request for a quote can be sent to potential suppliers. This is done to determine the price, quantity, and delivery date of the product or service required. It is crucial to provide all the necessary details in the request for a quote to ensure that suppliers can provide accurate quotes.

Step 3: Obtain Quotes

After the request for a quote has been sent out, potential suppliers will provide their quotes. It is essential to evaluate these quotes based on factors such as price, quality, and delivery time. The evaluation should be done objectively, and it is advisable to involve multiple stakeholders to ensure that the evaluation is thorough and unbiased.

Step 4: Obtain Approval

Once the quotes have been evaluated, the purchase must be approved by a designated authority. This can be a manager or a procurement officer, depending on the organization's policies.

Step 5: Make the Purchase

After the purchase has been approved, the final step is to make the purchase. This involves creating a purchase order that includes all the relevant details, such as the item description, quantity, delivery date, and price. All the details in the purchase order have to be accurate and complete to avoid any issues with the purchase.

procurement contract approval process

Steps to create a procurement approval workflow

Software to support the process of procurement approval

Viindoo Purchase Software supports the procurement contract approval process in several ways, including:

  • Streamlined Requisition Management: Viindoo Purchase Software makes it easy to create and manage purchase orders. Users can create purchase orders and submit them for approval with just a few clicks, making the process faster and more efficient.
  • Automated Approval Workflow: The software includes an automated approval workflow that routes purchase orders to the appropriate approver. This ensures that purchases are approved by the appropriate authority and comply with company policies.
  • Increased Visibility and Transparency: Viindoo Purchase Software provides real-time visibility into the process of procurement approval, allowing users to track the status of their orders at any time. This enhances transparency and accountability and ensures that everyone involved in the procurement process is on the same page.
  • Integrated Vendor Management: The software also includes an integrated vendor management feature that allows users to manage their vendors' information, such as contact details, payment terms, and performance metrics. This makes it easier to select the right vendors for each purchase and ensures that all vendor information is up-to-date.
Viindoo Purchase supports procurement approval process

Viindoo Purchase is an effective solution for SMEs

The procurement approval process is a crucial step in the procurement cycle. By having a standardized process in place, organizations can make purchases that are necessary, authorized, and comply with their policies.

Continue reading more Viindoo Blogs:

What is the Procurement Approval Process: Detailed Guide
Viindoo Technology Joint Stock Company, Trịnh Thị Ngọc Anh 26 April, 2023

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