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• The goal of procurement is to keep up with an organization’s emerging product and supply chain needs to meet the business’s end goals.
• Procurement is a strategic process involving identifying, selecting, negotiating, and settling contracts with suppliers. But what is the purpose of procurement?
• Procurement aims to purchase the highest-quality products at the best prices to achieve competitive positioning. Procurement teams aim to design procurement processes that ensure the highest quality outputs.
Steps in the Procurement Process to Ensure Quality
1. Identifying which goods and services are needed
First and foremost, a business must be interested in a new or an existing product or supply. This product may be a new item or an item that needs restocking. Here, you have to dig deeper into the specifics of the business. The product details may encompass technical specifications, materials, service characteristics, or part numbers. So, it is crucial to define the product specifications to ensure quality delivery.
2. Submitting purchase request
Individuals and companies often send a purchase requisition form anytime they want to purchase products or services. This formal purchase request is known as a purchase requisition. The purchase requisition notifies the organization that specific needs exist and defines the product requirements needed to satisfy these needs. The product or service specifications written in the purchase requisition may include quality, price, time frame, and other crucial details.
3. Assessing and selecting vendors
You already have a comprehensive list of product requirements and approved purchase requests at this juncture. This is an important step in selecting the right vendor and sending them a request for a quote RFQ. The request for quote RFQ refers to a document sent to different vendors to ask for and receive a quotation. It’s critical to be prepared and as detailed as possible to compare different products.
It’s advisable to negotiate prices and terms. A great way to negotiate prices is to obtain and compare quotations from suppliers. Each quote must be critically examined and compared to other remaining quotes from other suppliers. Record the terms immediately when you get to the final quotations. The negotiation step is considered critically underpinning in ensuring a quality procurement process.
5. Inspect delivered products
Quality inspection evaluates deliveries for damage or errors. Ensure you do a thorough assessment to ensure the products are delivered based on the purchase order provided. It’s further advice to ensure the quality meets or exceeds expectations.
6. Three-way matching
The three-way matching is the detailed, end-to-end process of examining the purchase order, the goods received notes, and the supplier’s invoice to ensure they match. The goal of the three-way matching is to prevent unauthorized invoice payments. Three-way matching ensures that the products or suppliers ordered through the purchase order are indeed delivered and the invoice settled by the supplier’s invoice. So, doing a thorough matching process will prevent unauthorized payments, saving the organization time and money.
Record-keeping is an overlooked yet critical step of a quality procurement process. It’s critical to keep a clear record of all documentation – from invoices, purchase requests, receipts, negotiations, and more. Record-keeping is crucial for a variety of reasons. It may help the organization reorder products and goods at the initial prices and assist with tax calculations and auditing processes. Accurate records help resolve potential conflicts later on.
Here Are Procurement’s Best Practices for Quality Procurement
The procurement function is a highly strategic function demanding attention to detail. Organizations are upscaling the adoption of streamlined, effective procurement processes to ensure quality procurement.
- Procurement software. Automating procurement processes is a concern for enterprises. Organizations are streamlining their procurement processes by deploying robust, smart tools that help assess and determine the best suppliers based on former records. Procurement software embeds tools, including predictive analytics that assess and determine the best suppliers based on several metrics: damages, returns, prices, timely deliveries, and quality.
- Centralized documentation hub. Having a centralized documentation hub is a critical first step toward quality procurement. Organizations are deploying centralized procurement hubs to consolidate procurement records and facilitate better decision-making in future procurement activities. Consolidating all procurement documentation, from contract templates to operational processes, ensures consistency of contracts and communication. In addition, it leads to fewer errors and saves time.
- Process transparency. It’s critical to practice process transparency at every stage of your procurement. Process transparency leads to faster processing, accountability, cost-reduction, and responsible sourcing processes. Indeed, according to documented research, almost 50% of professionals are considering procurement tools to improve transparency and accountability.
- Data to optimize inventory. Optimizing inventory is critical because inventory costs can be incredibly enormous. Indeed, logistics experts place inventory optimization costs at around 40% to 75% per year depending on the business. Moreover, organizations are driven by a constant push to streamline spending. That means focusing on optimal stock levels is key to reaping quality procurement processes.
ProcurePort – Your Leading Partner in Quality Procurement
The world is transforming with technological advances in artificial intelligence, big data, the internet of things, and automation. Already, organizations are tapping into present-day capabilities to streamline critical operations and strategic functions. Procurement is one of the areas targeted for improvement, with automation and big data being the leading drivers for this new transformation.
In this realization, ProcurePort, a leading solution provider, offers procurement solutions. With ProcurePort, you can rest assured of quality procurement processes through advanced capabilities such as managed reversed auctions, spend analysis, contract management, procure-to-pay, and custom solutions.
Contact ProcurePort to improve the quality of your procurement process.