Procurement Policy & Procedures – The Ultimate Guide 2022

For a procurement manager, the procurement policy and procedures are two of the most important documents for the procurement process. Without those documents, your procurement process is sorely lacking in core policies and standards.

In this article, we are going to talk about procurement policies, procedures and how important they are for establishing your procurement process. Once you’re done reading the article, you should now have an idea of how to create your procurement procedures and policies.

Whatis a Procurement Policy?

By definition, a procurement policy is a set of rules that outline the overarching principles and standards used to set the direction and decisions of the procurement process. It helps guide employee decision-making under a given set of circumstances in a framework of goals and objectives set by the management.

To make the explanation simple, procurement policy means the set of rules followed to create an effective procurement process. These rules are created by the people who began the procurement process within the company. While these rules are open to change, there is also a chance that the rules will be changed to accommodate new and useful ideas.

Each procurement policy has its details. The details are set by the procurement team and they will decide which rules or data under the policy works well in creating an efficient procurement process. Each policy is usually written as a guideline to follow, but again, it is not prescriptive about how to go about performing a competitive bid. 

For the policy to work, this is where procurement procedures come to play.

The Procurement Procedures– How it Works?

Before we dive into how procurement procedures work, we need to first understand what it is.

Procurement procedures define the process of implementing your policies. They are the series of steps that your procurement team will follow until you’ve reached the goal. The goal is always the result that your procurement process wants to achieve. The procurement procedure is consistently repeated until everyone in the team becomes so used to it that it’s already become a routine.

The only way to create a procedure is to come up with several procurement policies first. Once you have a set of policies that you can follow, you can start the creation of procurement procedures to follow.

For example, if your company has a Competitive Bidding Policy where a buyer is expecting the procurement to exceed the price threshold for competitive bids, then the procurement procedure for such a policy may go like this:

• Create clear requirements in a work statement for the product or service that you are procuring.
• Develop and approve the Request for Proposal while following the RFP standards of getting great proposals and reducing the risk.
• Identify prospective vendors
• Respond to vendor questions
• Receive, evaluate, and score proposals
• Down-select vendors and conduct interviews and demos
• Creating scoring workbooks for proposal evaluation
• Perform pre-contract risk assessment and due diligence on the finalist supplier
• Negotiate and award the contract

Most companies have templates, forms, checklists, and other tools that can help in supporting the constant implementation of these procedures. Examples of these include an RFP template, a contract checklist, a proposal evaluation scorecard, and others.

How to Write a Procurement Policy

1. Defining your goals and needs

Before you write your own procurement policy, you must first spend some time thinking about what it needs to accomplish. 

For example, a business that is scaling quickly requires a procurement policy that will allow them to maintain momentum while still protecting the business. 

Thus, the reasons why you have to create a procurement policy that is aligned and that clearly describes your goal. As you write your procurement policy, you must keep this in mind. 

2. Research and start writing a draft

Although no two procurement policies should be identical, it will help you to research, review a few examples, and check some templates about it.

Once you are done researching, you can start writing a draft of your procurement policy. You must remember that you should try to write as concisely and clearly as possible to help the stakeholders understand it easier and better.

3. Get the approval of key stakeholders

Once you are done with your draft, it is time to solicit feedback from key stakeholders in your company. Usually, it is best to start soliciting the advice of the manager or your direct supervisor. Then, move on to finance, legal, operations, or any other departments that are involved with the acquisition of products. 

Additionally, writing and editing by committee is always a risk. Thus, approach stakeholders with the intent to inform and consult. It is important to hear their suggestions. However, you must also carefully consider the edits that you will make. 

Furthermore, always remember your goals when writing a procurement policy. When you have arrived at your final draft, submit it for executive approval.