Creating a Procurement Management Plan: Procurement Best Practices

Posted by on July 18, 2012 in Business Management [ 0 Comments ]

procurementIn this age of global competition, companies are looking for ways to improve efficiency of operations while cutting out unnecessary costs. In other words, trimming the fat and increasing profits is a top priority for many businesses. One of the quickest ways to achieve these two important goals is to create a procurement management plan.

Procurement strategies are increasingly popular in manufacturing for the simple reason: they can produce tremendous savings and boost long-term profitability when implemented properly.

What is procurement management plan?

A procurement management plan is a blueprint that maps out a specific strategy for analyzing and improving the total procurement process from all angles. Without such a plan, it is very difficult to find out exactly where there are areas in the supply chain that need to be discarded or greatly improved.

It may be quite likely that there are people within the organization that see procurement as just another boring process – a means to an end. They wonder, what’s the big deal about paying attention to how and where things are purchased? It is easy to brush this process off as nothing special. However, any company that wishes to have a competitive edge in today’s fast-changing business environment is going to pay close attention to what is happening in their own supply chain.

A typical procurement management plan may include the following:

  • Supply Chain Leader (Strategic Oversight)
  • Procurement (Sourcing and Purchasing)
  • Logistics (Order Fulfillment)
  • Management (Forecasting, Planning, Review)

Large companies are leading the way when it comes to procurement strategy planning and implementation. Mid-sized and smaller companies are becoming more enthusiastic about learning how to rethink their current approach to procurement.

  • Best practices have already been established in procurement and they incorporate:
  • Management participation
  • Supplier partnership
  • Training
  • Cost analysis
  • Technology
  • Commitment to continuous oversight

Creating Your Plan

Procurement-management-plan

Credit: Supplychainquarterly.com

An important point for a company looking to create a strong procurement plan to understand is that you will need individualized procurement solutions. While there are some excellent examples online, no two companies are exactly alike when it comes to dealing with suppliers. Each manufacturing operation has its own unique way of doing things.

This is why it is a good idea to consider having a professional procurement gap analysis done by one of the top procurement consulting services online. This detailed cost savings report will allow you to get a jumpstart on implementing a best practices procurement management plan that works well for your business.

Creating a solid plan to improve the procurement process in your company should not solely fall on the shoulders of the purchasing manager. A report by the Aberdeen Research Group stated that Mid-Market companies are increasingly relying on consultants to assist with this task.

Consultants have proved useful in helping to analyze a company’s total purchasing costs, measure and track key cost indicators, negotiate contracts with suppliers, train employees about cost saving methods, manage implementation of supplier processes and institute procurement best practices. Whether a company chooses to implement a few ideas or create an extensive strategy, it is best to make it a team effort with management participation across the board.

Photo credit: hgpauction.com

Al Kraus is Owner/CEO Procurex, a cost management and consulting company in Bordentown, NJ. If you like this article, follow the Procurement Best Practices Series on the Procuex blog.


Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>