The word “procurement” has been unduly seen as “dull”. However, all of us in our everyday life undertakes procurement of some sort – from compiling a household shopping list to buying the lastest iPhone or replacing your 10-year-old car!
To start, let’s simplify it:
“procurement is simply working out what is required and managing the process to ensure you receive the purchased items in the most timely manner at the most cost-effective price.”
So, what are the mistakes you really don’t want to make:
Failing to negotiate
Some people feel uncomfortable when the time comes to negotiate. They tend to avoid this part and accept the contract without even trying. Thats a mistake! First of all, because failing to negotiate can be detrimental to the procurement cycle. The ramifications can be costly on a number of different levels. Secondly, because a good negotiator will always be appreciated. It shows you know your business and are confident in the manner you manage it.
It is vital to have the skills to negotiate with the chosen supplier – this can be done even after the supplier is chosen. Your lines of communication must be clear – implementing a contract management platform is advised so your communication is not muddled amongst the back and forth of emails that might occur.
If you still rely on excel spreadsheets and your good old memory, let me tell you that you are doing it wrong.
“88% of Excel spreadsheets used by businesses contain significant errors”
Nowadays, the only reliable way is to embrace technology, this will save you time and money. Digitalising your methodology will improve the procurement process for you and your team with automated reminders, the ability for e-signatures where required, managing your spend and ensuring your department is following compliance.
Going over budget
Financial goals are set and need to be adhered to throughout all steps of the procurement process (no matter how many there are!). Rushing into making a buying decisions is one of the most common reasons why a budget is usually blown out. Ensuring you constantly refer to the outlined budget in all steps and allow adequate time for the process so you are not rushed is very important.
Not embracing your team
The procurement department is usually often made up of more than 1 member.
So, you should embrace your team members, and other employees of the business to ensure you are making the right procurement decision. If your procurement purchases impact other departments within your organisation it is also beneficial to get their input before you make your final decision. Keep your lines of communication open so you can benefit from others’ input and suggestions.
Ignoring your supplier’s advice
A good buyer – supplier relationship can sometimes make or break the effectiveness of the procurement process. Actually, your supplier can provide benefits with advice in regards to the product, up-coming and better value products, the ordering process and also give you reliable information about the delivery options.
3 best practices to nail your procurements process:
Nothing better than a good partnership
As we said, building a good strategic supplier relationship in the early stages is key to any good long term partnership. Your procurement process will reap the rewards and have a competitive advantage, secure pricing and even early access to new products or services. At the end of the day, it’s all about human relationships right?
Your team, again
Your team is the most valuable resource if you want to get the procurement process right! Obviously, it requries s a strong methodology but it is always good to have a collaborative framework within your team. You should even include the end-users of the item or service you are procuring to ensure that you get it right the first time – and it matches exactly what is required.
Finally, automation, automation and automation
Things are already difficult, so make it simple. Automation is being drawn into our everyday life – robotics, AI, OCR… this is also the case with streamlining the procurement process. That will reduce your paperwork and avoid time consuming errors.