10 Fundamental Steps of Procurement Procedure
March marks National Procurement month across the world and to mark the occasion we have a number of blogs being posted across March outlining its history, the fundamentals and what we can expect in the sector for the next 12 months and beyond.
One of the reasons people may not have procurement as their profession of choice is perhaps they don’t understand what it is or what it entails. In essence procurement concerns the purchasing of supplies and materials for an organisation to do their job and flourish in their industry. And within that process there are several vital steps that need to be taken to ensure the best results. Here are 10 Fundamental Steps of Procurement Procedure.
1) Know exactly what you need
When you or a customer discovered there is a gap in their supplies or process, the first thing you need to understand is what is needed to fill that space. The customer may have an idea of what they think they need, but this can sometimes be off the mark or can be a lot more expensive than alternatives. So it is clear to talk through the options and decide upon what you really need to purchase.
2) Scour the marketplace & do your research
Once everyone is in agreement of what they are looking for, you are able to narrow down your search to a certain corner of the marketplace. From there, thorough research is required to identify several options which can be presented to those involved to make an informed decision.
3) Look outside the market
As well as searching the usual areas of the marketplace for a solution, it is also a good idea to look in areas you may not traditionally search. New solutions are being created every year which could have several potential uses if seen through fresh eyes, so do not limit yourself to the status quo.
4) Data as power
For several years now, data has been referred to as the ‘new oil.’ The more information you can gather the better, however it is also important to have a way of collecting, sifting through and observing the data. The data analyst role is growing in popularity, so have a team in place to help you decipher what you have collected can be extremely useful.
5) Have your sourcing strategy at the ready
Whatever your strategy may be, whether it’s a direct purchase, acquisition or strategic partnership to name a few, it is important that it is in place and clearly laid out for everyone involved before you proceed. Determining the right strategy will depend on the competitiveness of the marketplace and the supplier themselves in terms of their business strategy and risk levels/factors.1
6) Know your position & make your decision
Before speaking with any potential supplier, it is important to discuss your terms and lines in the sand with your stakeholders long before any negotiation takes place. Displaying a united front is very important, as not doing so can weaken your position and sew doubt between the parties involved.
7) Make payment clear and pain free
The process of purchase requisitions and purchases orders can be a long and arduous task and can leave one or both parties being soured on the whole deal before any transaction even takes place. Do your part to make the whole payment process as easy as possible to maintain a good working relationship. Customer service at all stages can make a big difference when it comes to repeat business.
8) It’s good to talk, always
With your customers, stakeholders, suppliers or whoever you are dealing with, always keep the lines of communication open at all times and be sure to keep everyone in the loop, no matter how small an update or piece of news maybe. Again, having people feel like that can trust you can affect your reputation no end.
9) Check your goods & keep good records
Upon delivery of your good/solution, always be sure to check everything that has been agreed upon is present and accounted for. The smallest bolt, the most seemingly insignificant programme, needs to be as you stated during your negotiations. If not and something comes back to haunt you down the line, it will be hard to prove culpability and again, can sour your relationship.
10) Improve & repeat
Once the full process has been completed, it is always good to review everyone on the steps taken above for feedback purposes. Could you have researched slightly more thoroughly? Could you have found more data to influence your decision? Could you have been a bit firmer in your negotiation techniques? Asking these questions and giving honest answers can improve the process for the next project and help save time, money and relations for a long time to come.
Learn more about our upcoming CPO Event in September 2020 here.
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