Procurement cycle

Habari Mwanafunzi! Welcome to the World of Procurement!

Ever wondered how your school got its new computers? Or how a big supermarket like Naivas always seems to have fresh milk and bread on the shelves? Or how the county government builds a new road? The answer, my friend, is a powerful process called Procurement. Think of it as the art and science of smart shopping, but on a much bigger scale! Today, we are going on a journey through the Procurement Cycle, the step-by-step safari that every organization follows to get the things it needs to succeed.

What Exactly is the Procurement Cycle?

The procurement cycle is a series of sequential steps that a company or organization follows to acquire goods or services. It’s not just about buying; it’s a strategic process to ensure they get the right product, at the right price, from the right supplier, at the right time, and in the right quantity. Getting any of these 'rights' wrong can cause big problems!

Let’s visualize this journey with a simple diagram:

   [ 1. Need ID ] ---> [ 2. Specs ] ---> [ 3. Sourcing ] ---> [ 4. Tender ]
          ^                                                        |
          |                                                        |
 [ 10. Review ] <--- [ 9. Payment ] <--- [ 8. Delivery ] <--- [ 5. Evaluate ]
          |                                                        |
          `---------<---------<---------<---- [ 6/7. Contract/PO ]

Now, let's break down each step using a local example. Fikiria hivi (Think of it this way): A new secondary school in Nakuru County needs to buy 50 desks for its first Form One class.

The 10 Steps of the Procurement Safari

• Step 1: Need Identification

  This is the beginning! The headteacher realizes, "We have students coming, but no desks!" The need is identified: 50 student desks.

• Step 2: Develop Specifications

  We can't just say "desks." We need details! How big? What material? A good specification might be: "50 wooden two-seater desks, made from treated pine wood, with a metal frame, dimensions 110cm x 40cm x 76cm." This clarity prevents suppliers from delivering the wrong item.

• Step 3: Sourcing Suppliers

  The procurement officer now looks for potential suppliers. Where can we get these desks? They might search online, check the yellow pages, or look for local "jua kali" artisans in Nakuru who are famous for good furniture. They create a list of potential suppliers.

• Step 4: Solicitation (Tender / Request for Quotation)

  This is where we invite suppliers to bid. For 50 desks, we might send out a Request for Quotation (RFQ) to 3-5 shortlisted suppliers. For a very large project (like building a whole school), the county government would advertise a Tender in the newspaper.

  Image Suggestion: A close-up shot of a Kenyan newspaper, like the Daily Nation, showing a "TENDER NOTICE" section. The notice should be from a County Government for the supply of school furniture, with clear tender numbers and deadlines.

• Step 5: Evaluation and Selection

  The suppliers send back their quotations. The school's procurement committee now evaluates them. It’s not just about the cheapest price! They will consider price, quality of wood, delivery time, and the supplier's reputation.

  Real-World Scenario:

  • Supplier A (Nairobi): KSh 4,500 per desk. Delivery in 3 weeks. Well-known company.
  • Supplier B (Nakuru Jua Kali): KSh 4,800 per desk. Delivery in 1 week. Good local reputation.
  • Supplier C (Mombasa): KSh 4,200 per desk. Delivery in 4 weeks. Unknown quality.

  The committee might choose Supplier B. Even though it's slightly more expensive, the fast delivery is crucial for the new term, and supporting a local business is a bonus!

• Step 6: Negotiation and Contract Award

  The school might negotiate with Supplier B. "Can you do KSh 4,700 if we pay a 50% deposit now?" Once an agreement is reached, a contract is awarded. For smaller purchases, this contract is often a document called a Local Purchase Order (LPO).

• Step 7: Purchase Order (PO) Management

  The official LPO is sent to Supplier B. This is a legally binding document that details the items, quantity, price, and delivery terms. The supplier starts making the desks.

• Step 8: Delivery and Inspection

  One week later, a lorry from Supplier B arrives with the 50 desks. The school bursar and headteacher don't just sign and let it go! They inspect the delivery. They count the desks (are there 50?), check the quality (is the wood good?), and measure one or two to ensure they match the specifications. If everything is okay, they sign the Delivery Note.

  Image Suggestion: A vibrant, realistic photo of a Kenyan school compound. A quality control officer (the bursar) is inspecting newly delivered wooden desks, checking the joints and finish, while the supplier's delivery team looks on. The background shows a typical Kenyan school building.

• Step 9: Invoice Processing and Payment (The 3-Way Match)

  The supplier now sends an Invoice (the bill). The accounts department will perform a crucial check called the 3-Way Match to prevent fraud. They check that the details on three documents are identical:

  1. The Purchase Order (what we ordered)
  2. The Delivery Note (what we received)
  3. The Invoice (what we are being billed for)

  Let's do the math on our example:

  
     1. PURCHASE ORDER:
        - Item: Two-seater desk
        - Quantity: 50
        - Unit Price: KSh 4,700
        - TOTAL: 50 * 4,700 = KSh 235,000
  
     2. DELIVERY NOTE:
        - Confirms receipt of 50 desks in good condition.
  
     3. INVOICE:
        - Bill for 50 desks @ KSh 4,700 each.
        - TOTAL: KSh 235,000
  
     CONCLUSION: All three documents match perfectly. Sawa! The payment of
     KSh 235,000 is approved and sent to the supplier.
  

• Step 10: Record Keeping and Performance Review

  The final step! All documents (LPO, Delivery Note, Invoice, Payment receipt) are filed away safely. This is vital for auditing and future reference. The school also reviews the supplier's performance. Were they on time? Was the quality good? This review helps decide if they will use Supplier B again in the future. This completes the cycle!

Why is This Cycle So Important?

Following this cycle properly is crucial for any organization. It ensures transparency (everyone can see how money was spent), promotes fair competition among suppliers, guarantees value for money, and reduces the risk of corruption and fraud. As a future supply chain professional in Kenya, mastering this cycle is the key to your success!

Well done for making it through the entire procurement safari! Keep asking questions and observing how organizations around you buy things. You are now on your way to becoming a procurement expert. Kazi nzuri!