Procurement Strategies

Ever thought you wanted to create a procurement policy for your business but wasn't sure how to start?

What is it exactly? Good question well let me explain what one is. If you're in business then you have suppliers who you buy your raw materials from, a telecommunications company who you pay your phone bill to, or a bank where you deposit your money into. Are you starting to get the picture?

This type of strategy is simply reviewing who your suppliers are, and acquiring your goods and services at the best possible price. I've known companies who are medium to large organisations and rather than have a fleet mobile phone plan where your entire fleet shares the costs and savings, they had individual plans for each person. One company even had different plans with different suppliers? Talk about throwing money away. Of course the phone companies won't tell you that so it's up to you to do it.

After salaries and wages the next most expensive cost for most businesses is travel and accommodation but it doesn't have to be if you're smart about it.

The first thing to consider is the recognition that there is a need or want for a particular good or service. Before there is a chance for the acquisition of goods, there has to be the desire to actually gain possession of something in particular.

Without recognising the want or need, there is no reason to pursue any of the following steps that ultimately lead to a purchase. In short, if there is no desire, there will be no purchase.

The next step involves the evaluation of potential suppliers. This will involve getting to know more about vendors who can supply goods or services that will meet all the specifications, including the price range. This may involve taking bids on a project, negotiating prices, or accepting proposals. Over time, one or two suppliers are likely to stand out from all other vendors. Once the final decision is made between the two remaining suppliers, the time has arrived to move on to the final stage of the procurement process.

The last step involves taking possession of the desired good or service, ensuring that the item is in compliance with all the claims made by the supplier, and rendering payment according to the terms worked out with the supplier. By understanding the basics of procurement you can obtain the goods and services you require as well as the most cost effective solution.

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