As in other areas of business, procurement specialists give an advantage over an entrepreneur or small business owner, who finds this out as the business grows. While experts argue about reducing costs, developing new markets and minimizing risks, the purchase may seem rather intimidating to a small business owner. Many entrepreneurs are not familiar with these topics and are aware of the impact of procurement later than they should.
Companies with an effective procurement team often do great business and enjoy the success of regular customers.
To dot all the i, consider all the basic processes that modern procurement entails. This will give you clarity regarding the core functions that make up the bulk of procurement responsibilities. You will need to search all of this in any competent procurement platform.
Checking Requirements and Stocks
Before starting the procurement cycle before payment, it is necessary to determine the need for a product or service. In the context of small business, the key is assessing the validity of needs. As any procurement specialist will tell you, check the availability of certain products / materials in your "stock". Emphasize for yourself what you are missing, and from this already delete those points that seem meaningless to you. Give preference to the most real and effective purchases, so that later all this is justified. It’s very important that you check your needs and double check your availability before moving on to the next step: increasing your purchase requests.
Raise a purchase request
Here, a team or team member who needs a specific product / service will send a request. This can be a paper form, an electronic form or an oral request by phone. If you are starting over, use electronic forms to help store and communicate. Ensure that requests only occur after certain administrative requirements are met. This is a method that will help you ensure that only valid requests are executed. As practice shows, it is precisely this method at the very beginning that plays a huge role, since it reveals you as an entrepreneur to suppliers from the best side. Follow the clear rules and regulations in the application process, and then your business will begin to develop as it should.
Purchase Request Management
Start by assigning primary responsibility for approving purchase requests. Someone from the finance department or the procurement department considers each purchase request and either approves it and issues a purchase order, or sends it back to the customer indicating the reason for the rejection. Once the order has been approved on behalf of your company, it is recommended that you perform a budget check. Do this before submitting any inquiries or offers (RFP, RFQ) as needed. This is important because it often happens that we order everything that seemed necessary, and then we cannot pay for the order. Getting into debt both at the beginning and at the peak of raising a business is a bad policy. Do everything based on finances.
Another tip: you can get around this if a bulk purchase is possible. This is best suited for unique, one-time purchases of low value goods or services or unmanaged purchases of a particular category.
Negotiation and approval of orders
After you submit the purchase order to your supplier, they can approve it, reject it or start negotiations.At this point, you can discuss variables such as delivery schedules, alternative items, prices, and mode of transport. Please note that the agreement is a legally binding contract. After the seller signs one, they are required by law to provide the listed services or goods in accordance with the specified schedule at the indicated price.
Receiving goods and / or products
Your seller sends you the goods or provides the service and introduces you to an important document on the receipt of goods. You sign it as soon as you confirm that the requested product (or services provided) is in order and is in your warehouse. At this point, you also perform a security measure called tripartite compliance, which means comparing the purchase order, the packing list that comes with the product or service, and the vendor invoice. As soon as you make sure that they all match, only then you should go to payments.
Office work and seller productivity
After you have completed all the processes that lead from “procurement” to “payment”, you take two measures to ensure consistency. The first is record keeping, and the second is supplier performance analysis. After each payment is made, register it for a permanent record, useful for an audit, and when you need to receive details regarding the order later, this will help you. Switching to digital data will help you store all your purchase data in an easily accessible centralized location.
The work of the supplier is perhaps the only key to effective procurement. Here you evaluate each supplier by such factors as the quality of goods delivered or services rendered, how well they adhere to delivery schedules and contractual obligations, as well as the speed of response. If you were not happy with any of these areas, check this in red. Supplier performance management analysis helps you maintain and extend relationships only with the most effective suppliers.
Conclusion
Understanding procurement processes means making first-class purchases! Entrepreneurs think a lot and they don’t have to feel that they need to become a procurement expert so that their business runs smoothly. Just start with the basics and understand how to make the right purchases. Set up some automated purchasing systems so you can be sure that they work at the same pace every time.
Do not let the lack of knowledge prevent you from competing with experienced professionals - master these basics correctly and you will already have a good start!