The Improvement Guide to Efficient Procurement Process – Part 1

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procurement

Are you a procurement staff who is responsible for the procurement of goods or services for your company? Or, perhaps, are you the manager of this department?

If you consider that your department already has achieved a high level of productivity, it is because you realize how important the efficient process of the procurement that helps bring to the success of the organization. But, no matter how good the management of the procurement is, you still need to improve your management regularly so that it can be much better.

The rapidly developing economic condition is the reason behinds it all. Procurement department must be able to be a part of the company that contributes to its survival and success in the competition by reducing cost while increasing efficiency.

Therefore, this article will discuss how to increase the productivity and efficiency of the procurement of goods or services. This article will be in three parts because there are a lot of parties involved in the procurement process. We try to give solutions to every party so the problems and tips can be specifically addressed.

The first chapter of the article will discuss how to improve procurement efficiency within the internal scope: which to improve and which to eliminate.  Here are the lists.

Think twice before issuing a purchase requisition

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Before issuing purchase requisition, you must ensure that there is a need to procure certain goods or materials. Therefore, you must have access to inventory data. The first tip to efficient procurement is utilizing the stock to its maximum function.

Imagine if you ordered an item whose quantity was still available in the warehouse and did not order goods that were actually needed. That would be a mess.

In addition, you must be able to collect other important documents that show the current state of your company. This document will be useful for understanding how procurement performance far, the resources used, the costs of each department, and the growth of the company.

Standardize and centralize the procurement process

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Standardizing your procurement procedures will create a better inventory management process. This process will help you manage and utilize the inventory available in your organization.

Furthermore, with centralized procurement standards, you can effortlessly monitor the whole process, provide transparency, resolve legal issues more efficiently, and evaluate tenders more easily.

Monitor the global markets

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Often times, there are certain conditions that cause the price of the material you need fluctuates in the market. The cause of the fluctuation depends heavily on global and local market trends.

Therefore, as a leader in the procurement department, you must keep an eye to the global trends and obtain materials at its best prices when the market price is low.

Focus on the total price of procurement, not the price of the item

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Sometimes, procurement managers look for vendors who offer the lowest price. But, actually, that decision is not wise. You need to consider the total costs that you will spend on the procurement process.

These costs include the total value of shipping, packaging costs, import duties, payment terms, and other taxes. These are what you should focus on.

Train your team regularly

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To maximize the output from the human resource, you must regularly train your staffs about any innovations in this field. The goal of this activity is that they will have extensive knowledge of procurement and minimize human error.

In addition, a consistent frequency of meetings and discussions will provide your staffs with opportunities to outgrow their ideas and innovations.

Conclusion

These are the procurement tips to improve efficiency within the internal department. The success of the procurement process is determined by how good your management is.

Ensuring your company’s current situation and noting that you actually have things to purchase are the things you must not miss. If you consider these tips to be applied to your management, the procurement process will be at minimum risk and ultimately smooth your cooperation with vendors.

The second part of this article will elaborate on things you can improve in networking, transacting, and managing with vendors.

Related article: Learn What E-Procurement Is and Its Benefits for Business

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