A lot of talk has been centered around strategic endeavors and how procurement and sourcing can move into a more centric position and align themselves with the organizations goals. But we realize there are still groups mired in purchasing roles, looking for some semblance of control. So here is a quick guide on establishing a basic procurement process.
Purchasing for a project will proceed smoothly if there is a natural flow to procure the items needed. A formal, professional procurement process saves time, money and risk. So, what is the procurement process and how does it work?
Make a Template
If you are responsible for purchasing materials for a business project, but you do not have access to a procurement specialist, a template would be useful as well as reusable. A template is also helpful if procurement is not part of your core business model. Of course, some procurement experience is much more desirable than none at all.
When you have a project requiring detailed technical knowledge, it is best to know how and where to research for a useful template. Once it is found, it can be useful ad infinitum. The template is somewhat formal, but not as invasive as the formal procurement process appears to be.
The Formal Process
Sometimes, the formal procurement process can be cumbersome and appear bureaucratic in nature. That appearance may just save you from some of the biggest mistakes of your life. It is well worth noting that the procurement process template gives you a framework for purchasing almost anything in business. The template allows you to:
• Save time and still ensure you get the solution that your business needs
• Pay a fair price, which may or may not be the lowest price
• Include all critical steps so nothing needs correction in the future
Using the standard procurement process means that your suppliers are familiar with the steps you are taking. They already know what you expect and will come to the conclusion that you represent a business that is very professional. It is worth remembering that each project is different and the small ones do not need every step of the formal procurement process as a large project will need.
The Five Steps
The procurement process has five general steps. These include:
• Definition of the business need
• Outlining the procurement strategy
• Selection and evaluation of a supplier
• Negotiation and award with initial product evaluation
• Induction and integration
Don’t Stop Here
As an important part of the last step (induction and integration), do not order any goods or services until the signatures on both ends of the contract are in place. This establishes the Purchase-to-Pay (P2P) process is agreed and understood from the start. Pre-determined service levels must have a measurement of success in place. When that measurement is complete, both parties will sign off on it.
Every procurement project follows this same broad, general process. The key is remembering that this process must be adaptable to the project you are working. If you require sub-steps, put them into the outline as it is presented above.
Make a Template
If you are responsible for purchasing materials for a business project, but you do not have access to a procurement specialist, a template would be useful as well as reusable. A template is also helpful if procurement is not part of your core business model. Of course, some procurement experience is much more desirable than none at all.
When you have a project requiring detailed technical knowledge, it is best to know how and where to research for a useful template. Once it is found, it can be useful ad infinitum. The template is somewhat formal, but not as invasive as the formal procurement process appears to be.
The Formal Process
Sometimes, the formal procurement process can be cumbersome and appear bureaucratic in nature. That appearance may just save you from some of the biggest mistakes of your life. It is well worth noting that the procurement process template gives you a framework for purchasing almost anything in business. The template allows you to:
• Save time and still ensure you get the solution that your business needs
• Pay a fair price, which may or may not be the lowest price
• Include all critical steps so nothing needs correction in the future
Using the standard procurement process means that your suppliers are familiar with the steps you are taking. They already know what you expect and will come to the conclusion that you represent a business that is very professional. It is worth remembering that each project is different and the small ones do not need every step of the formal procurement process as a large project will need.
The Five Steps
The procurement process has five general steps. These include:
• Definition of the business need
• Outlining the procurement strategy
• Selection and evaluation of a supplier
• Negotiation and award with initial product evaluation
• Induction and integration
Don’t Stop Here
As an important part of the last step (induction and integration), do not order any goods or services until the signatures on both ends of the contract are in place. This establishes the Purchase-to-Pay (P2P) process is agreed and understood from the start. Pre-determined service levels must have a measurement of success in place. When that measurement is complete, both parties will sign off on it.
Every procurement project follows this same broad, general process. The key is remembering that this process must be adaptable to the project you are working. If you require sub-steps, put them into the outline as it is presented above.
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