Procurement is an essential part of every business, regardless of size or industry. After all, how can you create and sell your product if you don’t have the raw materials or components to do so? Procurement involves making sure those raw materials get from their supplier to your business in the best way possible, and that your business handles those supplies with care and integrity from purchase to sale.
It’s essential to have clear processes in place when it comes to procuring materials and supplies, but several steps can be taken to streamline the entire process from start to finish, making your business more efficient, organized, and profitable in the process.
10 Tips on How You Can Create a Seamless Procurement Process for Your Company:
1) Centralize Purchasing:
Centralize purchasing to improve efficiency and reduce costs. Find one person in your company responsible for ensuring that all other departments know what they need to purchase. This will ensure that everyone knows what they are responsible for and you’ll be able to communicate more effectively with the vendors. Make sure you’re aware of vendor restrictions, so you don’t overstep any boundaries and make it difficult on them. You may have very different restrictions, such as price limits or deadlines, so make sure that you’re not violating any stipulations by working with them. If there are multiple vendors available to choose from, get involved in vendor selection.
2) Determine Your Policies:
Be sure to keep your policies and procedures up to date. You don’t want to be caught not knowing what you should do if something goes wrong. Address the following questions:
- What are your guidelines?
- Who needs to sign off on purchase orders?
- What is the level of approval needed before making a purchase?
- How can you ensure that you’re getting the best price possible?
- How do you handle inventory, returns, and allowances for defective merchandise? -Is there a minimum order size or maximum order size allowed?
- Are there restrictions on how many units of each product may be purchased in one transaction?
- Does everyone in the company have access to the online system used for procurement and purchasing transactions? If not, make sure it’s available.
- What does your company do with outdated products in its possession at the end of their useful life? Does it destroy them or donate them to charity?
3) Consider Multiple Vendors:
Regarding procuring goods and services, there are two ways to choose suppliers: you can send out Requests for Quotations (RFQs) or Request for Proposals (RFPs). RFQs are typically used when one is looking for competitive prices, whereas RFPs are used when more specific details such as quality assurance, environmental sustainability, or ethical production need to be considered. The benefit of using RFQs is that the buyer has a wider range of options from which to choose; however, this also means they must spend time evaluating all of the quotes that come to find the best price. A downside of an RFP process is that the buyer will only get responses from those companies who want to bid on the project – meaning they could miss out on potential bidders with good product lines who might not be included in the list.
4) Use Data to Make Better Decisions:
Data is key when it comes to making better decisions. For example, you can use data to determine which suppliers are the most cost-effective and reliable. However, it is important to make sure that your data is accurate and complete. This way, you will be able to more accurately compare suppliers and make informed decisions about whom you want to work with.
- Establish an In-House Team: A dedicated team in your organization is often needed to make certain processes like procurement run smoothly. You need someone on staff that is solely responsible for looking into bids and taking care of contracts, so they are not just pushed aside or forgotten about.
- Invest in Technology: Automating as many steps of the process as possible can save a lot of time down the line when you’re doing routine tasks such as placing orders, comparing prices, etc.
Also Read: THE BASICS OF PROCUREMENT FOR BUSINESS GROWTH
5) Give Employees Input:
One of the most effective ways to create an efficient procurement process is to get your employees involved. Allow them to voice their opinions and make suggestions on how you can improve the process. If they are not allowed to contribute, they will feel as if their opinions don’t matter and that might lead to disengagement. When people have input into what they do daily, they work better together to ensure the job gets done correctly.
- Make Procurement Visible: Giving employees visibility into purchasing decisions empowers them because it makes clear why certain choices were made and why some purchases weren’t necessary.
6) Build Relationships with Vendors:
- Establish relationships with vendors that you know provide quality products and services.
- Maintain an open dialogue with your vendors to get the most up-to-date information about their offerings.
- Use effective communication and avoid any sort of passive-aggressive behavior when dealing with your vendors.
- If there is ever a problem, be open and honest with the vendor and work through it together to find the best solution possible.
- Don’t hesitate to ask questions, even if they are silly or seem obvious. Remember: Your vendor knows more than you do!
- Be patient during the buying process; sometimes things take longer than expected.
- Read product specifications carefully so that you are fully informed before making any purchases.
- Always ensure what you are purchasing is compliant with company policies.
- Finally, don’t forget to reward good vendors! A thank-you email, or a gift card will go a long way!
7) Be Flexible in the Marketplace:
When evaluating suppliers, be flexible in the marketplace and on your expectations. If you are not getting the best price, you may need to find someone who can provide what you need at the right price. And likewise, if the supplier will not meet your requirements, it may be time to find someone else. Be sure to ask these questions before committing:
- What’s the timeline?
- What’s the lead time?
- Do they have stock?
- What are the quality standards?
8) Document Everything:
Documenting all of your procurement-related processes from start to finish, and keeping everything in an easily accessible place will make it much easier to navigate when something goes wrong. It’s also important to keep this documentation up to date so that you can refer back if you need to.
9) Utilize a Supply Chain System:
One of the best ways to make sure that procurement is running smoothly is to utilize a supply chain system. A supply chain system can help with everything from managing contacts and following up with leads to updating purchase orders and invoices. It’ll also help you keep track of what’s been ordered, what’s on backorder, when something needs to be reordered, and more.
10) Keep It Simple:
Streamline your procurement process by using these tips:
- Create an organizational chart that maps out the chain of command in your organization and designate who will be in charge of approving purchases.
- Establish minimum purchase thresholds to ensure that unnecessary spending is avoided.
- Set up price terms with suppliers for key items such as paper, ink, and packaging materials to minimize costs in the long run.
- Develop procedures for placing orders that outline the steps required to complete an order, from choosing which product or service to purchase, documenting information about it, obtaining approvals from all necessary people, and signing off on the order.
- Implement a supplier evaluation system so you can compare their offerings against one another and choose what best fits your needs.
- Make sure there’s enough stock on hand before placing orders so shortages are avoided.
These 10 tips for creating a seamless procurement process will take your business to the next level, especially when you use Yaraa. Yaraa has a solution for every size of business. We offer software as a service (SaaS), which means you don’t have to worry about maintaining it or installing it on your network; we take care of everything. Watch this demo to start the process.