Business & Finance Corporations

The Difficult, but Rewarding Procurement Process

The government and corporations' acquisition of products and services that goes through bidding best explains procurement process. Bidding, on the other hand, is where businesses, small or not, compete with each other to win procurement contracts. This involves a series of stages which sellers find difficult, but very fulfilling to work up.

Organizations, which include the federal government, implement the process of procurement to cut on their acquisition and operational costs. They hire people to work as company buyers. For businesses that operate around the world, though, they appoint companies to provide global procurement services for them. This makes things a lot easier, quicker and comfortable for them.

Generally, procurement process begins with the sending of Request for Proposal (RFP) to the potential suppliers. Business owners, soon as they receive this letter, prepare and submit applications. However, there is this so-called Request for Tender (RFT) where any supplier is given the chance to participate. Some companies also accept quotes and the likes even without sending invitation.

After submitting applications, buyers make a thorough review. First, they validate the appropriateness of the supplies being offered. After this, they check on the quality, terms and conditions, logistics, schedule of delivery and others. They need to make sure that everything will turn out smoothly; hence, will not affect the business workflow. Of course, selection and awarding of bids come next.

Most entrepreneurs believe that pricing matters in the procurement process. This is somewhat true. If they offer prices for supplies that are a lot lower than the others, they will surely get the attention of buyers. But, this is not a guarantee of being awarded with contract. They have to make sure also that the costs they are presenting will not raise doubts.

Remember, those people that work on the procurement department are well versed with their jobs. They can smell tricks such that they can easily identify "low cost, low quality" bid. Sellers must therefore realize that buyers aim for cost-reduction opportunities and cost efficiency—not dubious or impractical price drops. Why? It is primarily because their company is at stake.

The key toward becoming successful in the process of procurement is submitting proposals that reflect cost effectiveness. Businesses, especially the small ones, must consider offering high quality goods and services for reasonable prices. But of course, the most important part of the "negotiation" is that they must be able to formulate cost that is lower than the competitions to be able to readily capture the interest of the procurement officers. Yes, cost reduction may still apply after the assessment on cost efficiency.

Some entrepreneurs are afraid to go through this procurement process. They find it difficult to do even before they try. Well, nobody can blame them because a few even define this as a gruelling method. However, they have no idea that with this difficulty come lucrative government or corporation contracts. With organizations spending billions of dollars just for acquisition of supplies, business owners must grab this chance to maximize their profitability.
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