The procurement process originates when a company needs to acquire goods or services from external sources, and it concludes when the company receives and pays for them.

Let’s consider a procurement process where the company needs to acquire physical goods. This process involves three main departments-Warehouse, Purchasing, and Accounting-and consists of the following steps:

• The process originates in the Warehouse department, which generates a purchase requisition to buy the needed products.

• The Warehouse forwards the purchase requisition to the Purchasing department, which creates a purchase order (PO) and forwards it to a vendor. Generally, companies can choose from a number of vendors, and they select the one that best meets their requirements in terms of convenience, speed, reliability, and/or other characteristics.

• After the company places the order, it receives the goods in its Warehouse department, where someone physically checks the delivery to make certain that it corresponds to what the company ordered. He or she performs this task by comparing a packing list attached to the shipment against the PO.
• If the shipment matches the order, then the Warehouse issues a goods receipt document.
• At the same time or shortly thereafter, the Accounting department receives an invoice from the vendor. Accounting then checks that the PO, the goods receipt document, and the invoice match. This process is called the three-way-match.
• After Accounting verifies the match, it processes the payment and sends it to the vendor.

Figure below illustrates the procurement process.