9 Steps to Streamline Your Procurement Process

By Kevin Shuler

Optimize Your Company with These Simple Strategies

Procurement is an organization’s way of ensuring it remains fully supplied and operational so that it can function. Your business needs every edge it can get to stay competitive. 

And perhaps one of the most overlooked areas that can grow revenue while enhancing the customer experience is by optimizing your current procurement process.

It’s not hard to imagine. Every business needs to purchase goods and services. And the larger a business grows, the more goods and services it needs. 

However, when obstacles slow down this process or ineffective oversight allows waste, your company loses its advantage. The more time and money a business has, the better chances it has of growing and succeeding. Following procurement best practices give your business both.

This is how you streamline your business’s procurement process.

1. Map Out Your Procurement Process

Before you can do anything, you need to understand the state of your business’s procurement process (developmentally). It would be a mistake to think of the procurement process as a fixed entity. Unchanging. Set in stone.

Instead, see it as organic. Something that should grow and change with your business. This means that even the most effective strategies break down over time if they don’t adapt to a company’s growth.

Procurement processes go through stages, increasing as your business develops over time. You’ll need to see what stage it’s in before you can begin optimizing it.

The best way to do this is by creating a flow chart that maps out your current procurement process. This will help you visualize, from start to finish, the whole procurement workflow. 

You’ll also quickly see what areas work effectively and where improvement is needed. Bottlenecks will need to be broken down and redundancies will need to be eliminated.

Typical Weaknesses in Procurement Processes

Many businesses face similar obstacles in the procurement process. Here are some potential weak points you may discover when you map out your business’s procurement workflow:

• Functionality: Orders take too long to process/get placed late, slowing down operations.
• Inventory: Issues with over/understocking goods, causing waste or abuse of spot-buys.
• Oversight: Unnecessary, redundant, or lacking management oversight, causing slowdowns, increasing risk, or causing ethical concerns.
• Maverick Spend: Higher “ad hoc spend” than necessary, leading to wasted revenue and lost opportunities with vendors.
• Customer Dissatisfaction: Customer experience damaged due to longer wait times, harming the image of your company.
• Vendor Relationships: Missed opportunities with suppliers (better discounts, cheaper options, better service) are lost, decreasing business advantage.
• Redundant or time-intensive paperwork: Lack of templates for contracts, leading to wasted time drafting, reviewing, and approving new contracts.

2. Restructure Inventory Monitoring

Some problems can be avoided simply by adjusting how your company monitors inventory. Knowing what you have in stock and the processing times of your vendors, you can better organize when your company places requests for inventory.

A company calendar can help plan out when new inventory/purchase requests occur for full transparency and decreased spot-buys.

3. Evaluate Your Vendors

Do you have the best relationship with your vendor? Are there better options in your area? Do you have approved backups in case your vendor falls through? The key to increasing your purchasing power is to understand the market and know how to leverage vendor relationships.

Regularly compare the market prices for goods and services offered to leverage your company’s history and business with your vendor. Keeping a database of alternatives for when vendors fall through or regularly fall short, can help ensure your company finds the right partners that will help grow your business.

4. Employ a Strategic Negotiator

If your company has the budget, hiring a trained negotiator for procurement can help greatly reduce costs for your business. Your negotiator will be able to leverage appropriate channels to reduce costs. This person would also understand the company’s best practices and contracts, ensuring consistent spending and efficiency across the company.

5. Empower Your Team

If you cannot appoint a procurement manager or negotiator, then empowering your employees is your next best option. Providing employees with limited business accounts for spend can empower them to quickly acquire needed resources. 

An example of this would be authorizing employees to buy toner for printers, paper, and other office supplies.

Note: Educate your staff on proper, ethical spending and have clearly outlined policies. This will help limit abuse and promote accountability

6. Design Templates for Purchases

Drafting contracts and forms can be a time-intensive process. Having templates on standby means that employees can quickly fill out details and put in requests without the back and forth required to draft most business forms.

7. The Role of Social Responsibility in Procurement Processes

Being sustainable matters. More and more businesses want to show their customers that they care about their environmental impact. Ignoring the role of sustainability in your procurement process can hurt your company’s image (and bottom line) over time. Sourcing responsibly now will help keep your business ahead of the competition.

8. Design Your Procurement Process to Adapt

Whether you appoint a department for procurement, your team, or one person, your system needs to be agile. Digital transformation isn’t a one-off obstacle that can be quickly overcome. It’s a constant challenge. 

Cloud-based platforms are pushing out 1000s of new features a year. This means that if you’re going to stay competitive, you have to be constantly ready for change.

Many businesses suffer from the faults of ineffective procurement processes simply because they are outdated. As your company continues to grow and adapt to its market, it should be aware of changes on the horizon and adjust accordingly. 

Also, realize that certain vendors may become less beneficial for your business over time. Be aware of the market and trending costs and be ready to switch vendors as needed to grow your business.

9. Automate Where It Will Best Benefit Your Business

No matter the size of your company, your business can benefit from automating processes. You’ll reduce errors from manual entry, cut down on the use of time-consuming spreadsheets, and improve efficiency across your business.

While there are clear benefits for automating procurement processes in your business, deciding which ones will best benefit from it can be a challenge.

About the Author

Kevin Shuler is the CEO of Quandary Consulting Group, a team of tech consultants that specialize in business process management. They use integrations and automations to help businesses scale as they grow, giving them more time to focus on what matters most.