Procurement Workflow

1. Objective

Standardize sourcing and purchasing into clear workflows that reduce PO touches, vendor follow-ups, and exception handling while protecting cost and supply reliability.

2. Scope

In Scope

  • Vendor sourcing & quoting
  • Standard & blanket PO entry
  • Drop ship POs
  • Overseas purchasing
  • Vendor confirmations
  • PO updates & tracking
  • Outside fabrication (plating, patch)
  • Vendor returns
  • Packing list uploads
  • Freight claims
  • Supplier evaluations
  • Inventory rules

Out of Scope

  • Customer sales pricing strategy
  • Warehouse receiving execution

PROCESS 1: Strategic Sourcing & Vendor Management

Combines: Researching Item Vendors & Pricing, Vendor Quoting, Supplier Evaluations, Quotes & Orders from Overseas Vendors

Objective: Secure best cost and reliable supply with fewer reactive vendor switches.

Inputs

  • Item demand
  • Quote request
  • Performance data (OTIF, quality)

Outputs

  • Approved vendor
  • Cost record updated
  • Supplier scorecard

Roles & Ownership

  • Buyer = Execute sourcing
  • Procurement Manager = Approve vendor selection
  • Finance = Cost review (if margin impact)

Step-by-Step Process

  1. Identify sourcing need (new item or cost review).
  2. Request quotes from approved vendors.
  3. Compare price, lead time, MOQs.
  4. Evaluate supplier performance history.
  5. Select vendor.
  6. Update ERP vendor cost record.
  7. Log supplier score (quarterly review cycle).

Exceptions + Escalation

  • Single-source item → Procurement Manager approval.
  • Large cost increase (>5%) → Finance review.

PROCESS 2: Purchase Order Creation & Release

Combines: Standard Purchase Order Entry, PO Blanket Order Entry, Supplies Vendor Order Entry, Entering Vendor Drop Ship POs, Fabrication Work Order Entry (Plating, patch, etc.)

Objective: Create accurate POs in one standardized flow to reduce corrections and re-entry.

Inputs

  • Purchase requisition or system demand
  • Approved vendor
  • Pricing record

Outputs

  • Released PO
  • Vendor acknowledgment requested

Roles & Ownership

  • Buyer = Enter & release PO
  • Procurement Manager = Approve large PO (threshold-based)

Step-by-Step Process

  1. Review system demand or requisition.
  2. Select vendor from approved list.
  3. Choose PO type:
    • Standard
    • Blanket release
    • Drop ship
    • Outside service (fabrication)
  4. Enter PO using standardized template.
  5. Attach required documentation.
  6. Release PO to vendor.
  7. Request acknowledgment (if required by rule).

Exceptions + Escalation

  • No approved vendor → Escalate to Strategic Sourcing.
  • Price mismatch → Resolve before release.

PROCESS 3: PO Management & Vendor Communication

Combines: PO Research & Updating, 2nd Vendor Confirmations, Packing List Upload

Objective: Reduce reactive tracking by using scheduled PO review cycles.

Inputs

  • Open PO report
  • Vendor acknowledgments
  • Packing lists

Outputs

  • Updated PO records
  • Confirmed delivery dates
  • Documented shipment records

Roles & Ownership

  • Buyer = Maintain open PO file
  • Receiving = Confirm receipt

Step-by-Step Process

  1. Run weekly open PO report.
  2. Identify overdue or unconfirmed POs.
  3. Send follow-up to vendor (single consolidated email).
  4. Update ERP with confirmed ship date.
  5. Upload packing list upon receipt.
  6. Close PO once fully received.

Exceptions + Escalation

  • Vendor non-responsive >72 hours → Escalate to Procurement Manager.
  • Repeated late shipments → Flag for supplier review.

PROCESS 4: Vendor Returns & Claims

Combines: Requesting & Entering Vendor Returns, Freight Claims

Objective: Recover cost quickly and prevent margin erosion.

Inputs

  • Damaged goods
  • Quality issue
  • Freight damage documentation

Outputs

  • Vendor RMA
  • Credit memo
  • Freight claim filed

Roles & Ownership

  • Buyer = Initiate vendor RMA
  • Warehouse = Provide documentation
  • Accounting = Track credit

Step-by-Step Process

  1. Receive damage/defect report.
  2. Collect photos and documentation.
  3. Request RMA from vendor within 48 hours.
  4. Record return in ERP.
  5. File freight claim (if carrier issue).
  6. Track credit status weekly.
  7. Close case when credit received.

Exceptions + Escalation

  • Vendor denies claim → Escalate to Procurement Manager.
  • High-frequency defect → Trigger supplier evaluation.

PROCESS 5: Procurement Performance & Control

(New oversight layer combining supplier evaluation discipline)

Objective: Ensure procurement decisions improve margin and reliability.

Inputs

  • Spend data
  • Supplier scorecards
  • Lead time trends

Outputs

  • Quarterly supplier review report
  • Approved vendor list updates

Roles & Ownership

  • Procurement Manager = Owner
  • Finance = Margin validation

Step-by-Step Process

  1. Review quarterly spend by vendor.
  2. Review delivery & quality metrics.
  3. Identify risk vendors.
  4. Decide: Maintain / Improve / Replace.
  5. Update approved vendor list.