Procurement Best Practices

The bottlenecks mentioned above can be mitigated by using the procurement best practices below:

1. Create Procurement Management Frameworks

You need to create a strong framework before you address the problems in the procurement process. You should know that this is not an overnight process so you can take your time to map out the workflows and build standard procedures.

The following are the processes where your framework should create guidelines:

• Monitor and approve purchase requests
• Manage your suppliers
• Quality assurance
• Payment and invoice
• Keep records
• Hiring new members of your team. Use an email finder extension to easily get in touch with potential candidates
• Train your employees on products and their procedures

2. Engage with your supplier

Your relationship with your supplier is vital to the success of your organization. Timeliness of delivery and assurance of the quality of the products requires a strategic relationship with your suppliers. 

You need to know your suppliers better in order for you to evaluate their performance and your relationship with them. You can engage your suppliers to collaborate effectively if you know them based on the data you gathered from their performance.

3. Improve your inventory

Inventory is often overlooked in the procurement process. But, this is more important than what you think. One of the procurement best practices is keeping your inventory at an optimal level. 

The cost of taxes, warehouse fees, outdated products, and insurance adds up over time which harms your return on investment when you hold it for too long. The inventory should rotate regularly to lower these risks and unnecessary expenses.

4. Automation of procurement process

An efficient procurement process will save you time and money. It will also give you more time to focus on your customers’ preferences and feedback. However, to reach this level of efficiency, you need to automate your procurement processes.

Employing automation in your procurement process will eliminate the repetitive tasks in your procedures that allow your employees to focus on other things. 

Another benefit of automation is that it is free from human error. There are times when employees cannot avoid making mistakes. Automation helps streamline workflows that improve your employees’ satisfaction.  

The following are the critical process you need to automate:

• Payment reconciliation

Payment reconciliation compares your accounting and your payments to make sure that they match. Through this, your cash flow is secured with ease and your team can focus on other tasks than process each transaction manually.

• Accounts payable

Accounts payable automation platforms refine everything from invoice coding to purchase orders. With this, you can efficiently manage accounts payable processes with ease and without human interaction.

• Invoice

Invoice automation is a complex process that is an entire area of its own even if it is under accounts payable automation. It handles price matching, data entry, approvals, purchase orders, and invoice processing. 

By automating invoices, you can reduce the occurrence of late fees that can make your suppliers happy resulting in giving you discounts.

5. Integrate your procurement process

The procurement cycle is full of approvals that create barriers. Ultimately, even with the help of automation, you will still have these gaps in your procedures.

That is why it is important that you can integrate your procurement process with one another. Instead of manually transferring data between procurement systems, you must connect it to one another so that it can process effectively.

6. Transparency

The stakeholders of your company must have the ability to see all the records, purchase orders, and technical specifications in real-time. This ensures that they are guided with the tasks that they will do. 

A transparent system enables better record management, strategic sourcing procedures, and cost reduction in procurement. 

The following are the steps to ensure transparency in procurement:

• Plan and implement strategic policies
• Document all steps in the procurement process
• Manage and update your list of potential suppliers regularly
• Create a flawless procurement contracts
• Perform audits from time to time

7. Work with procurement professionals

We know that procurement is a complex and dynamic system that has overlapping procedures. This makes your procurement to be challenging to improve. 

There are many questions that surround those who have just started in procurement. Even some procurement managers are confused about where to start improving their procurement processes.

This is where experts in the field of procurement come in. Those who have a comprehensive background in procurement can help you where to start. With their knowledge and experience, they know how to streamline your procedures even if it seems impossible.

8. Know your corporate responsibility

Many customers nowadays care about their responsibility in the community. That is why you need to be mindful of the impact of your supply chain on the economy and the environment. 

With the cancel culture on the rise, your organization must take note of all the expectations of the customers. If you fail or make a wrong move, you might end up damaging your reputation which is beyond repair.

9. Create Dashboards

Creating data dashboards enables your employees to see real-time data in your supply chain in a way they can easily comprehend. 

Your sourcing will become more flexible with a clear data dashboard in procurement. It can show accurate spend analysis, price fluctuations, and the performance of your supplier.