Procurement Management: Sourcing, Inventory and More

Get a solid grasp on procurement management processes needed to efficiently source and stock assets within your corporate entity.

The Procurement Management Process

It is essential that every entrepreneur knows what sourcing is, and why the process is needed. As procurements definition suggests, sourcing and purchasing administration will have policies that will guide them. It is a set of rules and regulations guiding principles and patterns in the purchasing operations. In many cases, major principles in procurement include transparency, clarity, equity, and accountability, which is why the following processes must be followed. There should not be any favoritism when you award a contract for a purchase to one person or organization over another. Everything should be recorded in a way that provides for accountability and transparency. This, then, enshrines the need to manage the procurement effectively.

1. Needs identification

Whether its goods, services, or labor needed, this really needs to be defined. This leads to identifying the quality and quantity of need, and also to defining the length of time for need. This information would suffice in meeting requirements for procurement contracts. The project team will take a strategic approach to set procurement budgets covering the products, materials, etc.

2. Identifying the suppliers

This is very significant because virtually anyone, any commercial entity, could file an application to get this contract. The company needs to distinguish between the companies of vendors who are capable of providing required needs and in a timely manner, not taking advantage of cost. It is a good purchasing strategy to have a trusted supply chain that you are going to be sending out purchase orders to.

3. Communicate with the suppliers

Inasmuch as oral communications are the fastest method, they offer no clarity or effective acknowledgement of the procedures taken for contract processing. Therefore, it is necessary that all things should be done in written form. Such communication of the procurement activities should be directed to key players in the supply management team. This includes sending the suppliers requests for quotes, proposals, information, or the supplier must also submit the tender. This provides transparency and clarity which meets the requirements of law.

4. Undertaking negotiations

The lead organization and the potential vendor agree on the price, quality, and quantity, and finalize a purchasing order. This is normal in any strategic procurement process.

5. Liaison of suppliers

Management assesses suppliers purchasing operations to make sure that they are capable of providing adequate resources. They do this to determine a suppliers ability to meet company requirements. Good supply chain management is critical for the business success.

Other Processes

1. Management of logistics

Management figures out logistics for an entire purchase of goods or services or labor, and estimates the timings reasonably to analyse when the payments should be made.

2. Sourcing According to Procurement Policy

This is done mostly through analyzing cost-cutting opportunities and growth in a company. It involves finding out the best quality goods or services, or even labor, at the cost rates which are fair and accessible to the purchasing organisation. The purchasing group should consult with the finance group to make sure that sufficient funds are available to buy a purchase request for goods and services.

3. Inventory – Procurement Management Process

This is very much an essential phase of the contracting process. It records all goods or services, or sources of labor, from suppliers, and stores them prior to delivery to a customer. The purchaser must also record all deliveries under purchase orders, as well as any irregularities that arise in delivering goods and services. These would be part of a firms budgetary controls. The procurement project manager is someone who supervises the process, in order to prevent errors.

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