Procurement is the process involving the acquisition of products or services needed for a company to carry out its operations. With direct impact on your bottom line and day-to-day functionality, effectively managing your company’s procurement process is critical. Finding the right supplier who can provide you with high-quality goods at a reasonable rate is key to keeping your costs in check and your profits growing.
Below, we cover the key steps involved in the procurement process.
The Main Stages of Procurement
- Identify the need. Figure out exactly what your company needs - is it a certain product, material, service, software, etc.? Specifically identifying an exact need can eliminate confusion, improve communication with potential suppliers, and reduce acquisition timelines.
- Find a supplier. Once you have identified what your company needs, it’s important to look into the options available in the market. Comparing different distributors will help you find the one that will give you the best price and help you stay cost-competitive.
- Negotiate the price and terms. Once you’ve found the right supplier, it’s time to focus on communication. Establishing a strong relationship with the supplier will help you to further negotiate the best price and terms for the product or service you’re obtaining. At this stage, you’ll also be able to lock in other key information, such as the distributor’s production or delivery schedule.
- Develop documentation. Develop the right paperwork, such as a pre-purchase questionnaire, purchase order form, payment form, or service agreement, to ensure you have written documentation of expectations and the agreed-upon terms between you and your supplier.
- Manage logistics. Setting up a standard system for orders and deliveries is an important part of ensuring that the products you’re ordering are correct, consistent, and on-schedule each time. Secure important logistical details, such as shipping, delivery, and payment, before ordering to make sure that your items reach you promptly and without any logistical delays.
By following these steps, you can be sure you’re getting the products you need, when you need them, at the right price for your company.
It’s only natural that changes or fluctuations may occur unexpectedly in the supply chain. But, by having an in-depth understanding of your company’s procurement process, you’ll be able to quickly adapt to anything that may come your way. In fact, being in tune with your procurement process allows you to face any supply issues that could arise and find quick, cost-effective solutions that won’t negatively impact your business.
Effective procurement is one of the core ingredients to creating a successful business. As such, it’s important to make sure that your procurement process aligns with your company’s specific needs and business goals to make sure that it has the products or services at its disposal to thrive and grow––without breaking the bank. Knowing these stages of the procurement process not only will get you your products cheaper and quicker, but it will help ensure the longevity and success of your business.
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