Sending the purchase order to a supplier is a legally binding action, as we make the promise that we will pay the goods or service that we planned to get from a specific provider from which we will buy them. Once a purchase order has been created and sent to a supplier, with which a more specific contract may or may not exist, the buying process starts. Selecting the final supplier will result in the creation of a contract, which could be a simple Purchase Order, or can be accompanied by a more complex contract including discounts per volume, or any kind of clause, leading to the start of the buying process.įigure 2: Planning part of the Plan - Buy - Pay process Buying Process The quality can also be taken in consideration, as well as other factors, such as delivery time, distance, or other predefined criteria.

The one with the best offer can be chosen, which might not only be based on price. The source determination process will do that, by discovering possible new suppliers, registering them in the list of approved providers, after what some quality checks can be ran, in the form of a request for quotation, also called RfQ.Įach of the suppliers are then contacted, asked to send a quote, and negotiations can start for the supplier selection. Once they have analysed their needs and planned their demands, it is necessary to discover possible sources of procurement that could potentially fulfil these requests. The company’s internal employees and streams can express requests of goods or services that are needed to execute their jobs. The planning process starts with demand determination: what is needed by the company, which is expressed in terms of demands.

See in detail below how these concepts are working together and support the Ariba business network.įigure 1: Plan – Buy – Pay process Planning Process Once the purchase order has been processed, and the goods have been delivered, the payment can take place, thus leading the company to acquiring what is effectively needed for the production, sales, or office purposes. The Plan-Buy-Pay process, which is the basic concept behind the Ariba business network, is the idea that the whole procurement process is interconnected, with the possibility to plan for needed goods in a company, that will be procured either from an external producer, or internally from another warehouse, and that these requirements which have been planned will be effectively ordered through a buying process.

Ariba buy