HOW TO SUCCEED IN PROCUREMENT MANAGEMENT

Success in procurement management generally comes down to whether or not you have answers to the 5 rights of procurement.

By procurement management am simply talking about a strategic approach to managing and optimizing organizational spend, remember you always need return on your investment.

This process will involve among other things the acquisition of quality goods and services from suitable suppliers within a predetermined budget, on or before the deadline.

Remember all business entities involve someone who knew how to turn idea into profits. Procurement management with profit in mind comes down to overseeing all the processes involved in acquisition of products, materials, goods and services needed for efficient business operations.

WHY IS PROCUREMENT MANAGEMENT IMPORTANT?

Without a properly managed procurement function, it would be impossible for most business operations to function effectively, here is why;

1. All items needed for a business to function, are properly acquired and that means projects and processes can proceed efficiently and successful.
2. Procurement is no longer a business necessity, it can be structured in such a way as to make it a competitive advantage this will ensure money, time and resources are saved or used efficiently
3. If properly managed, procurement will play a key role in the company’s bottom line by ensuring delays and errors are avoided while maximizing resources, effectively driving down costs.
4. Procurement is responsible for negotiating most advantageous deals in production and supply contracts.
5. Procurement management can also play an important role in spearheading corporate social responsibility in diversity and inclusion by proactively seeking diverse suppliers.

KEY STEPS FOR SUCCESSFUL PROCUREMENT MANAGEMENT.

1. Specification and planning.

There are a lot of risks that come with procurement contracts which must be managed. The first thing any serious organization must do is create a comprehensive procurement plan specifying what services and goods will be needed, whether internally and externally. This is the first move to ensuring you don’t spend more than you have to.

2. Identifying and selecting suppliers.

Now that you know what you want to procure, who is going to supply them? Where will you buy them? There are tools such as a Request for proposal that are designed to help the buying organization avoid wasting time with the wrong suppliers.

Potential suppliers must be researched and identified the main goal being to select those that are capable of meeting the organizational needs.

3. Proposal Requesting, Negotiating and Contracting. 

Once potential suppliers have been narrowed down, you can begin your negotiations. Success in negotiation makes a huge difference to your organization and it mostly depends on the outcome you desire and the outcome will depend on the approach you are using.

The negotiation process will tell you a lot regarding the dependability and trustworthiness of a potential supplier. You should be careful during this process on how you communicate your requirements such as, delivery timelines, payment details, and so on. Remember these will constitute terms of a contract you will arrive at.

4. Control and Delivery.

Once you have a contractual agreement with a supplier, effective contract management is important. Your purchasing department has to properly control all deliveries and payments. Part of control means realizing that at times you may need to change a thing or two depending on how the contract is being performed. Care should be taken to avoid such becoming a breach of a contract or something.

5. Measurement and analysis.

Finally, ensure you analyze the entire procurement process using your pre-established key performance indicators. By doing this you will be able to check on the efficacy, cost efficiency, speed, and overall success of the whole process.