Procurement System

What Is Procurement?

Procurement is the entire process of sourcing goods and services for an organization, from identifying needs through to paying the supplier. It encompasses the following key activities:

• Identify Need — Internal departments specify what they need to purchase, the quantity, and the intended use
• Purchase Requisition (PR) — Create a formal purchase request document in the system
• Request for Quotation (RFQ) — Obtain price quotes from multiple vendors and compare them
• Purchase Order (PO) — Issue a purchase order to the selected vendor
• Goods Receipt (GR) — Inspect and receive goods as ordered, verifying quantity and quality
• Invoice Verification — Compare the invoice against the PO and GR
• Payment — Pay the vendor according to agreed terms

This entire process is collectively known as Procure-to-Pay (P2P), one of the core processes that ERP systems are specifically designed to support.

The Procurement Cycle

A complete Procurement Cycle consists of 7 key steps, each interconnected and important:

Step 1: Purchase Requisition (PR)

The PR is the starting point of every procurement. It is a document prepared by the requesting department to formally communicate the need to purchase goods or services. A well-prepared PR must specify:

• Items/services requested, with detailed descriptions and specifications
• Quantity required
• Required delivery date
• Budget or funding source
• Justification of necessity

Step 2: PR Approval

PRs must be approved by authorized personnel, which may involve multiple levels depending on the amount and organizational policies, for example:

• Up to 10,000 THB — Department head can approve
• 10,001 - 100,000 THB — Requires division manager approval
• Over 100,000 THB — Requires director or managing director approval

An ERP system can configure Approval Workflows to automatically route PRs to the appropriate approver based on preset amount thresholds.

Step 3: RFQ / Price Comparison

Once the PR is approved, the procurement team will request quotations (RFQ) from multiple vendors to compare:

• Price — Including shipping, taxes, and discounts
• Payment terms — 30-day credit, 60-day credit, or cash
• Delivery time — How many days after ordering
• Quality — Does it meet the required specifications
• Warranty — Warranty terms and after-sales service

Step 4: Purchase Order (PO)

A PO is a legally binding document between the buyer and seller. Once issued, it confirms the organization's commitment to purchase goods according to the specified details and conditions. A proper PO must include:

• PO number (for reference)
• Item list, quantity, and unit price
• Payment and delivery terms
• Delivery location
• Reference to the originating PR

Step 5: Goods Receipt (GR)

When the vendor delivers goods, the warehouse or requesting department will inspect and receive them by comparing against the PO for accuracy — quantity, quality, and other details. The GR serves as evidence that the goods have actually been received by the organization.

Step 6: 3-Way Matching

This is the most critical step before payment — details are covered in the next section.

Step 7: Payment

Once 3-Way Matching is complete, the accounting department processes payment according to the terms agreed in the PO.

What Is 3-Way Matching?

3-Way Matching is the process of comparing three documents before approving payment:

Document	What It Tells You	Issued By
Purchase Order (PO)	What was ordered, how many, and at what price	Procurement Department
Goods Receipt (GR)	What goods were received and how many	Warehouse/Receiving Inspector
Invoice	How much is being charged and for what goods	Vendor

Why Is 3-Way Matching Important?

• Prevents overpayment — The vendor bills for 100 units but only delivers 80. Without matching, you would overpay for 20 units.
• Prevents duplicate payments — The same invoice is submitted twice. Without a verification system, you might pay twice.
• Prevents fraud — Fake invoices or vendor collusion can be detected because there is no supporting GR.
• Full auditability — Every payment has complete evidence from all 3 documents. Internal auditors or the State Audit Office can trace back any transaction.

Common Procurement Problems in Organizations

Based on our experience implementing ERP systems for various organizations, the most common procurement problems are:

Problem	Cause	Impact
No PR (Verbal requests)	No system in place, or seen as cumbersome	No record of who requested the purchase or why; impossible to audit
No price comparison	Always buying from the same vendor; no time to find alternatives	Paying more than necessary; not getting the best terms
PO without approval	POs can be issued without requiring approval	No controls in place; opens the door to overspending
No Invoice-GR matching	Paying invoices without verifying against actual goods received	Overpayment, duplicate payment, paying for unreceived goods
No vendor history tracking	No vendor database; information scattered among individual staff	No visibility into which vendors deliver late, provide poor quality, or overcharge
No summary reports	Procurement data is in multiple Excel files or paper documents	Executives cannot see overall spending; unable to plan budgets

Benefits of a Procurement System in ERP

When implementing a procurement system in ERP, organizations gain multiple benefits:

1. Transparency

Every step from PR to Payment is recorded in a single system. Complete evidence of who did what and when, reducing the risk of fraud and conflicts of interest.

2. Auditability

The system maintains an Audit Trail for every transaction. You can trace which PR originated a PO, who approved it, and how many quotations were compared. Ideal for organizations subject to internal audit or State Audit Office review.

3. Error Reduction

The system automatically pulls data from PRs to create POs — no retyping needed. This reduces data entry errors, and the system validates data automatically, such as ensuring order quantities don't exceed requested amounts and prices don't exceed set ceilings.

4. Online Approval

Approvers can review and approve PR/PO from anywhere — no need to wait for paper signatures. Reduces approval wait time from days to hours.

5. Vendor Management

The system stores complete vendor history — past purchases, pricing, on-time delivery performance, and quality records. This helps procurement teams make better vendor selection decisions every time.

6. Reporting & Analytics

Executives see the organization-wide procurement overview, including monthly procurement volumes, spending by category, key vendors, and budget-vs-actual comparisons.

Public Sector vs Private Sector Procurement

Public and private sector procurement processes differ in several ways:

Aspect	Public Sector	Private Sector
Legal Framework	Must comply with the Government Procurement and Supplies Management Act B.E. 2560 (2017)	Uses internal regulations; more flexible
System	Must use the Comptroller General's e-GP (Electronic Government Procurement) system	Uses internal ERP or procurement system of the organization's choice
Procurement Methods	Electronic bidding (e-bidding), price inquiry, specific method, selection method	Price comparison, direct negotiation, auction
Transparency	Must disclose procurement data publicly; audited by the State Audit Office	Audited by internal auditors and shareholders
Timeline	Longer duration due to legally mandated procedures	Faster, as steps can be streamlined as appropriate
Contracts	Must use prescribed contract forms with performance guarantees	Uses PO or mutually agreed contracts

Whether public or private, the principles of good procurement remain the same: transparent, auditable, fairly competitive, and cost-effective.

Saeree ERP and Procurement

Saeree ERP includes a Procurement Module that supports the complete procurement process from requisition to payment:

Feature	Details
PR / PO Management	Create PRs, automatically convert PRs to POs. Supports consolidating multiple PRs into a single PO or splitting one PR into multiple POs by vendor.
Multi-level Approval	Configure approval workflows by amount, department, or product type. Supports multiple approval tiers.
Quotation Comparison	Receive quotations from multiple vendors and compare prices, terms, and delivery timelines on a single screen.
3-Way Matching	Automatically verify PO vs GR vs Invoice. Alerts on mismatches to prevent payment errors.
Vendor Management	Comprehensive vendor database with purchase history, Vendor Rating assessments, and delivery performance tracking.
Integration with Other Modules	Integrates with Warehouse (automatic stock receipt), Accounting (automatic journal entries), and Budget (balance verification).
Procurement Reports	Summary procurement reports, outstanding POs, PR/PO status, and budget-vs-actual procurement comparisons.

A good procurement system isn't just about buying cheaply — it's about building transparent, auditable processes that reduce organizational risk. Every baht spent must have evidence, justification, and accountability.

- Saeree ERP Team

Summary — Checklist: What a Good Procurement System Must Have

Before selecting a procurement system or improving your organization's procurement process, check against this list:

1. Formal PR system — Every purchase request must go through the system; no verbal orders accepted
2. Approval Workflow — PR/PO must pass through tiered approvals based on amount
3. Price comparison — Obtain at least 3 quotations before deciding (as appropriate)
4. PO for every purchase — No purchasing without a PO; never buy first and issue the PO later
5. 3-Way Matching before payment — PO = GR = Invoice; investigate discrepancies before paying
6. Vendor database — Vendor history, performance evaluation, and tracking
7. Executive summary reports — Monthly procurement volumes, breakdown by category, budget comparison
8. Integration with accounting and warehouse — Seamless data flow without re-keying; reduced errors

If your organization is facing procurement challenges — whether unsystematic processes, lack of auditability, or the need for greater transparency, you canschedule a Demo or contact our consulting teamto assess your organization's requirements