How to Manage Your Procurement Cycle

procurement cycleProcurement is time-consuming and costly but also critical to the success of your business.

With this in mind, you must learn the steps to manage your procurement cycle in a more effective way.

Consider taking these 5 steps to make your procurement process better than ever.

1. Identify the Need and the Supplier

The first step of the procurement cycle is to identify which products or services your company needs. These goods can be internal or external.

Internal goods or services can include anything required to run the business. External goods or services are those that your business will sell.

During this stage, you must identify which products and services you need as well as the type, quantity, and the deadline by which you need them.

2. Consider Social Responsibility

Today, consumers are more serious about social responsibility. They want to know that the products and services they invest in make a difference in the world.

With this in mind, being a social steward makes a huge difference to your bottom line.

But it’s not only about keeping customers happy. When companies invest in high-quality and responsibly sourced products, they also create a space where people want to work.

3. Source Options and Negotiate the Price and Terms

Once you have sourced the right product or service, you must negotiate the terms of your agreement.

During this stage of the procurement cycle, you must investigate each available option to find the best price and terms.

Create a list of your favorite three providers and ask for all the relevant product or service details.

While you use the product or service provided, determine future relationships by assessing:

  • The performance of the materials or service
  • The completion time
  • Contract renewal
  • Terms for future orders

4. Use Contract Management

Depending on the size of your company, you can have dozens of different suppliers. This means going through a new procurement cycle with each one of them.

Instead of repeating the same processes, you can create a contract management system. This should include standard templates to improve productivity.

Using standard templates will reduce the risk of errors. It will also ensure you don’t forget to mention anything when dealing with new suppliers.

These documents will help you keep on top of your paperwork while also helping you meet your company standards.

5. Automate Your Procurement Cycle

Procurement takes time and can cost a lot of money, especially if you undertake your process manually.

To find the best supplier, you have to use the right automation tools. With TendersPage, you can:

  • Research suppliers
  • Gather data
  • Gain visibility
  • Make the best supplier choices

Other automation tools can help streamline your procurement process by making it easier to create contracts. With these, you can stay on top of payments and track your shipments.

Additionally, research suggests that by automating your procurement operation, you will increase efficiency by freeing up employee time.

Plan Your Procurement Carefully

If you don’t plan out your procurement processes, you’ll waste time and money.

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By doing so, you’ll receive relevant bids and RFPs allowing you to streamline your procurement processes.