The 7 Steps of Procurement Process

Procurement isn’t just about buying things. It’s a structured process that, when done well, saves money, reduces risk, and ensures organisations get the right goods and services at the right time. For businesses managing complex supply chains or significant expenditure, understanding each stage of the procurement process is essential.

Whether you’re new to procurement or refining existing processes, here’s how the procurement cycle typically works in UK organisations.

Step 1: Identify the Need

Every procurement process begins with recognising a requirement. This might come from a department requesting new equipment, a project team needing specialist services, or routine replenishment of stock.

The key at this stage is clarity. What exactly is needed? What problem does it solve? What are the specifications? Vague requirements lead to poor procurement outcomes, so defining the need precisely sets the foundation for everything that follows.

Step 2: Conduct Market Research

Once the need is established, the next step involves researching potential suppliers and understanding what’s available in the market. This includes identifying suppliers who can meet the requirement, comparing their offerings, and understanding current market pricing.

Market research helps organisations make informed decisions. It reveals whether the specification is realistic, whether there are alternative solutions worth considering, and what typical costs look like. For complex or high-value purchases, this stage might involve engaging with multiple suppliers to understand their capabilities.

Step 3: Develop the Specification

With market knowledge in hand, the specification can be refined. This document outlines exactly what’s being purchased, including technical requirements, quality standards, delivery timelines, and any compliance needs.

A well-written specification is precise enough to ensure suppliers understand the requirement, but flexible enough to allow for innovation or alternative solutions. It should also include evaluation criteria that will be used to assess proposals later in the process.

Step 4: Source Suppliers and Request Proposals

Now it’s time to formally approach the market. Depending on the value and complexity of the purchase, this might involve issuing a Request for Quotation (RFQ), Request for Proposal (RFP), or Invitation to Tender (ITT).

The method chosen depends on factors like spend value, complexity, and whether the organisation is in the public or private sector. Public sector procurement often has mandatory competitive tendering thresholds, while private organisations have more flexibility in their approach.

This stage requires careful supplier selection. Procurement teams typically maintain approved supplier lists or frameworks, but may also seek new suppliers for specialist requirements.

Step 5: Evaluate Proposals and Select Supplier

Once proposals are received, they’re assessed against the pre-defined evaluation criteria. This isn’t always about choosing the cheapest option. Evaluation considers factors like quality, delivery timelines, supplier financial stability, previous performance, and overall value for money.

The evaluation process should be objective and documented. For larger procurements, this might involve a formal scoring matrix with weighted criteria. For public sector organisations, transparency in this process is particularly important to ensure fairness and compliance with procurement regulations.

Step 6: Negotiate and Award Contract

After selecting the preferred supplier, the negotiation phase begins. This covers pricing, payment terms, delivery schedules, service level agreements, and contract terms. Even with a strong initial proposal, there’s usually room for discussion and refinement.

Once negotiations conclude, the contract is formally awarded. This stage involves preparing and signing the contract, notifying unsuccessful bidders (particularly important in public sector procurement), and setting up the supplier in relevant systems.

Step 7: Manage the Contract and Supplier Relationship

Procurement doesn’t end when the contract is signed. Ongoing contract management ensures the supplier delivers what was promised, on time and to the required standard. This includes monitoring performance, managing any issues that arise, processing invoices, and maintaining the supplier relationship.

Good contract management involves regular communication with suppliers, performance reviews, and addressing problems before they escalate. It’s also about identifying opportunities for improvement or additional value as the relationship develops.

For complex or long-term contracts, this stage might include regular business reviews, continuous improvement initiatives, and planning for contract renewal or re-procurement well before the current agreement ends.

Why Process Matters

A structured procurement process brings consistency, transparency, and control to organisational spending. It ensures that purchasing decisions are made objectively, that risks are properly managed, and that the organisation gets value for money.

The process also creates accountability. When each stage is clearly defined and followed, it’s easier to identify where things went wrong if problems occur, and to continuously improve procurement performance.

For organisations looking to strengthen their procurement function, understanding roles within the procurement process becomes increasingly important as complexity grows. Different roles bring different expertise to each stage, from strategic sourcing specialists who excel at market analysis and supplier selection, to contract managers who focus on the ongoing relationship.

Building Strong Procurement Teams

Effective procurement requires people who understand this process deeply and can adapt it to different scenarios. Portfolio Procurement has specialised in procurement recruitment since 1988, giving us over 35 years of insight into what makes procurement professionals successful.

As the #1 rated recruitment agency on Trustpilot with over 3,000 five-star reviews, we’ve built our reputation on understanding the nuances of procurement roles. Our consultants recognise that someone who excels at strategic sourcing brings different strengths than someone who specialises in contract management or supplier relationship development.

We offer comprehensive support including salary benchmarking, market insights, and industry expertise to help organisations build procurement teams that can execute each stage of this process effectively.

Work With Procurement Specialists

Whether you’re looking to hire procurement specialists for strategic sourcing, category management, or supplier relationship roles, Portfolio Procurement brings deep sector knowledge to your search. Our consultative approach means we take time to understand your requirements rather than simply forwarding CVs.

For recruitment solutions for procurement leaders, contact Portfolio Procurement’s specialist team today.