The procurement process: The eight steps in detail

1. Needs assessment

The needs assessment takes place at the beginning of every order. It provides an overview of which goods and services are required by the company. For this, the material stock is compared with the production and sales orders as well as the purchase orders.

In general, for the needs assessment, a distinction is made between three different types of requirement. Primary requirements (e.g. sellable devices and spare parts), secondary requirements (e.g. raw materials and individual parts) and tertiary requirements (e.g. auxiliary materials and supplies).

There are essentially three ways of carrying out the needs assessment. These are: deterministic, stochastic and heuristic. With the deterministic approach, the assessment is made using stock lists and formulas. The stochastic approach makes use of previous consumption data. For this, mathematical methods such as regression analysis and calculated averages are used, amongst others. With the heuristic approach, the need is determined according to subjective estimates by experienced staff.


  • Has the required quantity and quality been identified?
  • On average, how much material is in stock?
  • How many times does the warehouse turn over each year?
  • On average, how long are individual materials stored in the warehouse?
  • Which goods and services need to be purchased?

2. Inventory control

Inventory control is an important part of the inventory assessment. It provides a comparison of the target value and the actual value of inventories in the form of article master data, serial numbers and price lists. From this, important key figures can be obtained about current stocks, minimum stocks, average consumption, purchase prices, planned orders and much more. Inventory control is an important initial step in preparing the order.


  • Are all material stocks, movements, receipts and withdrawals documented?
  • What about turnaround time and turnover rate?
  • How much is ordered and when?
  • Where are items stored in your company?
  • Which items have to be counted and when?

3. Budget approval

Once the inventory control and needs assessment have been determined, the budget needs to be confirmed. This is essentially a matter for management, not one of materials logistics. In general, prior to a budget being approved, all planned orders are checked by a (usually internal) cost center to ensure they comply with an overall financial framework. At this point, liquidity protection measures are also carried out, meaning that many orders represent "tailor-made" transactions.

We cannot offer you a checklist for budgetary approval, as this process depends closely on the respective company guidelines. This means general statements cannot be made.


Present your company on our platform!

The advantages:

  • International audience and visibility
  • Set-up in 5 minutes
  • Numerous options and services through individual content

4. Supplier selection

Once the budget has been approved, it is time to select the appropriate suppliers. At this stage, it is also important to proceed extremely carefully, because the quality of your service or your products depends to a large extent on the quality of the purchased materials, products and services. For this reason, the selection of suppliers should be regarded as part of the strategic procurement process and is usually carried out well in advance.

When reviewing (new) suppliers, we advise carrying out a formal survey in the form of a questionnaire. External audits can also be carried out at the supplier's premises to demonstrate the quality of the system on site. And last but not least, all samples should be checked thoroughly.


  • Is the supplier well suited to meet your specified quality requirements?
  • What is the price and cost trend of the supplier?
  • What about delivery deadlines and adherence to schedules?
  • What are the delivery terms and conditions?
  • How long are delivery times?
  • Can I request samples?
  • Is there a permanent contact person?
  • Is the supplier flexible and responsive?
  • When are the payment deadlines?
  • Which payment methods are available?
  • What discounts are available?
  • Is a non-disclosure agreement needed?

More detailed information on the subject of supplier selection can also be found here.

5. Ordering

The supplier selection marks the end of the decision-making process. It’s possible to take into consideration several different suppliers when making the selection, meaning you can switch to an alternative supplier if necessary. Now comes the order. The order is the formal request to a supplier to provide a product or service. If the order is placed immediately following a binding offer from a supplier, and within the offer acceptance deadline, a contract is drawn up directly. If the offer was non-binding, the supplier must first respond to the order with an order confirmation.


  • Does the order contain all items in the correct quantities and units of measure?
  • Are the delivery date and address specified?
  • Does the order contain all the information on price, currency and payment terms?
  • Is the supplier’s address correct?
  • Has an order history been created?
  • Have all return options and procedures been clarified?
  • Are there options for order tracking?
  • Are there any special warranty conditions or country-specific features?
  • Is the supplier's customer service team easily accessible at all times?

6. Order monitoring

It is always possible for a supplier to fail to meet delivery deadlines or to deliver incorrect items, and this is why order monitoring is essential. For this it is important to document the order history precisely. Only a correctly managed order history makes it possible to react to events in good time (e.g. in the form of reminders) and avoid any damage to your own value-added process. To monitor orders, there are systems available that are integrated into the company's own IT.


  • Is the order history clear and informative?
  • Are deadlines being met or are there delays?
  • Is everything in place for a possible reminder and demand system?
  • Do ordered items have to be cancelled?

Tip: Read our free article on the influence of digitisation on the procurement process and find out how you can benefit from digitisation. 

7. Receipt of goods

Receiving goods involves more than just physically accepting the order(s) you have placed. It also includes the documentation of receipt and forwarding of the items and their input data. The value and quantity of the incoming goods must also be recorded in your accounts. Usually these records are made using the delivery notes or invoices showing the receipt of goods.

When goods are received, it is important that the delivered goods are carefully checked against the delivery note. If defects are found upon receipt of the goods, they should be refused or a complaint must be lodged with the supplier immediately. If this does not happen, the quantity stated on the delivery note is deemed to have been delivered and free of damage.


Before accepting the goods

  • Are the goods intended for you?
  • Is the order for the goods actually available?
  • Does the number of packages delivered match the number on the delivery documents?
  • Are items subject to exchange in an exchangeable condition?
  • Is there any externally visible damage to the goods?
  • Was the delivery date met?

After accepting the goods

  • Do the packages contain what is written on the outside?
  • Do the goods show signs of damage that were not visible from the outside?

8. Payment processing

Once the goods have been accepted, the accounting department checks the invoice as soon as it is available. The invoice should match both the order and the delivery note. If this is not the case, it is the job of the accounting department to sort these discrepancies. For this purpose, the accounting department contacts both the supplier and the purchasing department. Once everything has been clarified, the invoice is approved and posted. A payment authorization is created and the invoice amount can be paid via the bank.


  • Do the order and the information on the delivery note match?
  • Are all bank details correct?
  • Have all payment steps been checked and approved?
  • Is it clear where and how the invoice has to be filed?

The procurement process is completed once the invoice has been paid.

Regardless of whether you work in a fairly small company or in a large corporation, the stages of the procurement process usually follow this pattern. Nowadays, these processes can also be supported by software.

On our B2B platform europages you can find competent suppliers from various industries.