How do you build a procurement strategy?


Quick Answer

To build a good procurement strategy for your business, you need to clearly identify the scope of your needs for goods and services. This requires you to create a plan for approaching the process in a cost-effective manner, taking into consideration the quantities, time needed for delivery, availability of funds and a comprehensive budget.

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Full Answer

When building a procurement strategy, include a method for managing suppliers, contracts and payment of invoices. This requires legal advice as any contracts you enter with suppliers are legally binding, making you liable in case something goes wrong and you are unable to pay for goods and services rendered. As your procurement demands continue to expand, consider investing in a supplier relationship management system, also known as SRM, for managing your entire supply base.

To create a dependable procurement strategy, you must clearly outline the steps and procedures necessary to source for goods and services. These steps include different levels of identifying vendors such as pre-qualification, checks for quality and tendering processes. To create an effective procurement strategy, you should understand where your operations are and adopt affordable, conventional and practical sourcing practices. Once you have built trust and engaged reliable suppliers, you can competitively or non-competitively source for goods or services on credit based on the relationships.

A good procurement strategy stores data about dependable suppliers with attractive prices. Collect as much information as you can when bargaining or negotiating, and create a method for future deals. Make different procurement categories for easier monitoring of costs incurred by your business. Define a management method for each of the categories by preparing specific action plans that may include changing suppliers based on data in your system.

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