Get a clear understanding of the process of procurement necessary for efficient sourcing and inventory in a business enterprise.
The Procurement Management Process
It is important for every business owner to understand what is procurement and why such a process is necessary. As the procurement definition suggests there will be a policy to guide sourcing and procurement management. It is a set of rules and regulations that guides the principles and models of the procurement operations.
In many instances the major principles of procurement include transparency, clarity, fairness and accountability, so the process detailed below should be followed. There should be no favors in awarding a procurement contract to one individual or entity over another. Everything should be recorded in order to ensure accountability and transparency. This therefore spells out the need for efficient procurement management.
The procurement operation span months and the processes of conducting this activity include the following:
1. Need identification
Whether it is a good, service or work that is needed, this does need to be identified. Such leads to specifying the quality and quantity of the need as well as the duration for the need. This information will be sufficient in addressing the requirements of the procurement contract.
2. Identifying the suppliers
This is highly important as almost any one and any business entity can submit their application for this contract and the company needs to differentiate which supplier company can be able to deliver the required needs and on time without exploiting the cost.
3. Communicate with the suppliers
In as much as verbal communication is the fastest way it does not offer clarity and valid recognition of the procedure undertaken to process the contract. Therefore, everything should be done in written format. This involves sending the supplier requests for quotations, proposals, information and even the suppliers should send a request for tender. This ensures transparency and clarity that meets legal requirements.
4. Undertaking negotiations
The main organization and its prospective suppliers negotiates the price, quality and quantity.
5. Liaison of suppliers
Management evaluates the suppliers’ procurement performances to ensure they can supply sufficient resources. They do to determine the suppliers’ capability to satisfy the company’s requirements.
6. Management of logistics
The logistics of the entire procurement of the goods or services or work is also calculated and the time evaluated well enough to analyze when to make the due payments.
This is mostly done by conducting a research of the cost reduction and growth opportunities of the business. It involves finding the best quality of goods or services or even works at the price rate that is both fair and affordable by the procuring organization.
This is a very a important step in procurement. It records all goods or services or for works sourced by the suppliers and stored before they are delivered to the purchaser. The purchasers should also record all deliveries and any default realized from the delivery of goods and services. These will form part of the company’s budgetary control. A procurement manager is the one who oversees this process to bar against errors.