If there’s one thing the COVID-19 pandemic has taught the world of business (apart from that remote work is the future), it’s this: We aren’t prepared for disruption.
Supply chains, in particular, suffered a massive shockwave, with supermarkets, shops, and services being unable to operate the way they did before the virus struck. In fact, more than 3,000 suppliers in China were driven to force majeure declarations in the first few months alone.
As the world moves toward a new normal, you’ll be thinking about disruption and risk a lot more than you had done previously.
For businesses using suppliers, it’s necessary – now more so than ever – to establish a stellar procurement process to ensure goods and/or services can always be secured, no matter if micro (small, every day) and macro (large, extraordinary) disruptions happen.
That’s why, in this post, I’ll be discussing what the procurement process is, the benefits a documented and solid process brings, what the flow of a robust procurement process looks like, and how Process Street can help.
Read through the below sections to get up-to-date:
Or, if you just wanted to get your hands on a procurement process that you can default to in every day and extraordinary situations alike, grab it here:
Ready to become a pro at the procurement process? 📦
The purpose of procurement is to ensure that a company buys the goods and/or services it needs to operate profitably.
To do this, many tasks need to be undertaken so that goods or services are bought for a sensible price, while maintaining standards of quantity, quality, and reasonable delivery time. Depending on a company’s size and the sector it’s operating in, some will employ individuals whose sole purpose is to oversee procurement. If large enough, there could be a whole procurement team devoted to it.
What’s also important to note is the difference between purchasing and procurement.
Procurement isn’t purely to do with transaction, i.e. paying a supplier money in return for goods. Procurement, instead, goes beyond that and is all-encompassing. So much so, there are often multiple people working across various teams to complete the following steps:
Identifying what goods or services the business needs. 🔍 Getting purchase requests approved internally. ✅ Finding suitable external suppliers. 📦 Engaging in tendering or competitive bidding processes. 🚧 Negotiating with suppliers and drawing up contracts. 📑 Acquiring, receiving, and inspecting the goods. 🚛 Developing and furthering business relationships with suitable suppliers. 🤝
As the team at Supply Chain Game Changer expertly put it:
“In short: Purchasing is an activity that’s a subset of the overall procurement process.” – Supply Chain Game Changer, What’s the Difference between Procurement and Purchasing?
What is the procurement process?
To put it simply, the procurement process is made up of all the steps and tasks that need to be completed so that procurement can be done successfully.
Without having a standard process for procurement, the flow for how it’s done can be different every time, which isn’t exactly, well, good (and especially when times aren’t ‘normal’). The absence of a procurement process means you could continually go about procurement poorly, thereby increasing your bottom-line rather than reducing it.
Suffice to say, havingContinue reading