Procurement procedure in tendering

Published : 8/08/2022

Procurement is simply the act of obtaining goods or services, typically for business purposes. Procurement is most commonly associated with businesses because various businesses need to avail services or purchase goods, generally on a large scale.

Traditionally, procurement use to be a manual and cumbersome process but in today’s technology-driven world its has become streamlined. At the moment, E-procurement is gaining more weight due to its transparency and ease of usage. Let us go through the process of procurements in tendering in 5 simple steps.

Step 1: Need Identification and Analysis:
When there is a need to procure equipment and materials or other relevant goods externally is from where the procurement process starts. A needs analysis should mainly outline: who you are buying for and who needs the goods, works or services (in case you are a buying agency for a business). Additionally. You also specify how the goods, materials or services you plan to buy benefit the business or people you are buying for, now and in the future.

Making this step easier for you, TenderTiger has solutions for its buyers that will aid you to select suitable suppliers for the required goods or services from its massive list of registered suppliers. As known, tender responses will be submitted to the parent buyer/business for evaluation and hence encouraging a competitive bidding between selected suppliers.

However, in certain cases, a specific supplier may be designated based on patent rights held by that supplier, compatibility with the existing facilities, whether they are the only seller of the product they supply or similar situations.

Step 2. Request For Submission of Tenders:
Once a Tender Document is prepared by the buyer organisation, they then float it around various media like Newspapers, Business magazines, Online tender portals, etc in order to invite suppliers to place their bids on the specific requirements of goods or services. A request for tenders indicating the conditions of the tender, contract conditions, and tender specifications will be provided to potential suppliers who will be invited to submit tender proposals.

The potential supplier must submit financial and technical proposals by the specified date provided in the tender document. It is ideal for a supplier to keep adequate contingency funds aside. This will not only lower the risk factors of the proposal but also makes your proposal stand out closer to being awarded. Lastly, get it vetted by a professional to ensure you have not missed out any vital relevant documents like certificates and liciences.

Step 3. Technical Evaluation of Tender Response:
The various supplier bids received will be first evaluated technically, which means conforming if the requirements needed are met within the mentioned terms and conditions. At times, Technical proposals will be evaluated prior to the opening of the financial proposal or also both are evaluated simultaneously. At times, the supplier gets a consortium partner, where his shortcomings are addressed by another organisation to complete the entire requirments lists of the tender.

Step 4. Negotiation and Award of Contract:
Once a tender response is submitted the buyer of the goods or services will shortlist suppliers as per the requirement of the project. Those tenderers which meet the specified technical condition and requirement are recontacted requesting a more competitive bid. Negotiation mainly happens over contract price and other conditions to make it an ideal deal for the buyer.

Step 5. Delivery, and Payment:
Products or services that are committed by the supplier need to be delivered in the given time frame. Some, businesses, also mention a clause in the terms and conditions that they reserve the right to claim liquidated damages if delivery is delayed beyond the specified delivery deadline. So suppliers, need to commit what they are capable of delivering, to avoid such legal issues during the contract.

Payment terms and conditions need to be well defined and agreed upto by both the buyer and the seller. Some businesses also clarify the preferred method of payment which is then finalised upon on mutual discussions.

Summing up:
Additional to the above 5 procurement procedures, a business also has to define if it will adopt the single stage or two stage of procurement. Both have their own set of advantages and disadvantages and hence buyers nedd to see which one fits best as per their requirement.