The initial step in the purchasing cycle is to determine what?

• A. Needs to be determined
• B. Vendor contracts
• C. Invoices received
• D. Orders placed

Answer: (A)

Identifying and defining what is needed starts the purchasing cycle. You determine exactly what item or service is required, the required quantity, quality or specification standards, delivery timing, and any budget or approval constraints. This clear need creates the scope that guides sourcing, evaluations, and any contract terms you’ll negotiate. Without defining the need, there’s no basis for choosing suppliers, issuing a purchase order, or processing invoices, and the rest of the steps would lack direction. After the need is established, you move on to selecting vendors and negotiating contracts, then placing orders and eventually receiving invoices.