Without a solid procurement process, even the most successful business can crumble. Managing the procurement process is one of the most important responsibilities out of all the areas of business operations. It requires a knowledge of and appreciate for processes and logistics management. If you are just starting out as a procurement manager fresh out of management leadership training, you need to familiarize yourself with the steps of the procurement cycle. Learn up on these procurement management steps below.
Need Recognition & Specific Need
The first stage of the procurement cycle is called need recognition. In the need recognition stage, the manager is responsible for recognizing which products are needed. This is incredibly straightforward. If you do not know a product is needed, how will you know to order it? Identify the products that need to be acquired in order for operations to run smoothly. Then, be sure to identify the specific products and model numbers that you hope to procure. That is the “specific need” part of the procurement process. Once you have completed these line items, you can move on to the steps below.
Consider Supplier Options
Once you know what you need, now you have to know where to get it. Just as you would when shopping for personal reasons, you should shop around before deciding on a supplier. A huge part of proper procurement management best practices is doing your due diligence when selecting suppliers for business. Your company may have an approved vendors list. If not, take time to determine the best suppliers for the goods you need. Then, establish a relationship with suppliers going forward. This will help you secure preferred pricing or other perks.
Most businesses require the procurement manager to submit a purchase requisition before creating a purchase order. Be sure to do this if your business requires it. This part of the procurement management process gives you the opportunity to get the go ahead from the decision makers regarding your purchase. These decision makers can include anyone from the business owner to the sustainability consultant. Typically, you will be expected to submit the product quantity and description desired, as well as the name of the vendor and the expected price. Once you get approval for your purchase requisition, you can move on to the next stage.
No procurement management process is complete without creating a purchase order. Create a purchase order form the second your purchase requisition is approved. Purchase order forms are used between buyers and sellers. These documents set and record the price, specifications, terms and conditions of the product purchase. If you create a purchase order template on your own, you can also include room for any additional obligations both parties have agreed to. Once all the appropriate parties sign off on the purchase order format, all that is left to do is wait to receive your products.
Procurement managers are also responsible for ensuring receipt and inspection of products upon arrival. Once the products are shipped, you should keep a close eye on shipment tracking to make sure they arrive in a timely manner. Your purchase order may include details about expected shipment dates and shipping times. If it did, make sure the shipment meets those specifications. Then, inspect the product to ensure it meets quality expectations set forth in your buyer/seller agreement. Then, you can elect to accept or reject the product shipment. Once you accept your shipment, the procurement cycle begins again.
Procurement management is not for the faint of heart. If you are just starting out in your procurement management career after some lengthy but somewhat unhelpful project management courses, use this post as a helpful procurement management process guide. This will help lead you through the stages of procurement management step by step. That way, you can successfully procure products for business operations in a timely and efficient manner. Good luck!
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