To successfully land contracts with corporations, it is important to understand how the corporate procurement process works. In this article, we detail the steps involved in most corporate procurement processes. With this knowledge, you will be better positioned to create compelling proposals that will catch the eye of buyers and help your company find sustainable sources of revenue for years to come. This understanding will also help you not be overwhelmed by the complexity of the corporate procurement process.

What is corporate procurement?

Corporate procurement is the process of purchasing products and services from suppliers. To be considered and potentially gain access to the highest-value contracts with large companies, suppliers are expected to follow their corporate procurement process.

Steps involved in the corporate procurement process

While every corporation has its own procurement process, most companies follow certain steps to identify and contract with suppliers, including:

1. Needs identification

The first step is to identify the goods or services the corporation requires to meet its operational needs or strategic objectives.

2. Supplier identification and screening

Once the corporation has identified its requirements, it needs to identify potential suppliers that can fulfill those needs. This may involve conducting a supplier search or soliciting recommendations from colleagues or industry contacts. Corporations may also screen suppliers based on criteria such as quality, reliability, financial stability and demonstrated ability to comply with relevant regulations.

3. Request for Proposal (RFP) or Request for Quotation (RFQ)

Corporations often create and send an RFP or RFQ to selected suppliers, outlining their requirements and asking for detailed proposals or quotes. The RFP or RFQ may request information about specifications, quantities, delivery schedules and pricing. There is a distinct difference in the buying process of private-sector corporations and that of government agencies. Most private-sector bids are by invitation only.

4. Negotiation

Once a preferred supplier has been identified, the corporation may negotiate with the supplier to finalize terms and conditions, including price, payment terms, delivery schedules, warranties and service levels.

5. Contracting

After negotiations, the corporation and the selected supplier enter into a formal contract that governs the terms and conditions of the goods or services to be provided. The contract may include provisions for dispute resolution, remedies for non-performance and other relevant clauses.

6. Order placement

Once the contract is in place, the corporation places an order with the supplier for the required goods or services. This step includes providing detailed specifications, quantities and delivery instructions.

7. Order fulfillment

The supplier processes the order and delivers the goods or services to the corporation according to the agreed-upon terms and conditions.

8. Receipt and inspection

Upon receiving the goods or services, the corporation inspects them to ensure they meet the specified requirements. Any discrepancies or quality issues are addressed with the supplier.

9. Payment

After the goods or services are accepted, the corporation processes payment to the supplier. Payment terms are part of the negotiation and contracting process. If speedy payment is important to a supplier, these terms should be part of the contract negotiations. Find out in advance what the corporation’s payment terms are and if there are faster payment terms available for small businesses. Corporate vendor portals often provide the terms of payment and other general supplier engagement information and are always a great source of background information. If interested in learning more about corporate vendor portals, please refer to the article on the topic in this tool kit.

10. Supplier performance evaluation

The corporation may assess the supplier’s performance after the purchase is complete, considering factors such as delivery timeliness, product quality, customer service and adherence to contractual obligations. This evaluation can inform future procurement decisions and help with supplier relationship management.