Procurement best practices are strategies that may be followed when making company purchasing decisions. These practices may include building supplier relationships, team-based approaches to procurement and proper use of technology or e-procurement. Implementing procurement best practices may significantly improve the effectiveness of purchasing decisions.
One of the most important procurement best practices may be improving the relationship between the buyers and suppliers. Choosing a supplier based solely on competitive pricing is often viewed as short-sighted and may be ineffective. An alternative procurement practice is to use suppliers that offer reliable products at fair prices.
Building a long-term relationship with a reliable supplier can result in better customer service and may prove to be more cost effective over time. Constantly changing suppliers in search of the lowest price can be detrimental to a business for a number of reasons. Changing suppliers on a regular basis may actually result in less reliable service which can end up costing more if deadlines are missed or customers are dissatisfied. Also, some lower priced vendors may not stay in business as long, so the risk of having to switch suppliers again runs high. Building a relationship with a steady supplier can help build a respectful business arrangement, and the supplier may be more likely to appreciate the steady business and make concessions when needed.
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Another procurement best practice is to make an entire department responsible in some way for procurement. Making procurement practices more of a team effort can boost company morale and improve strategic approaches to purchasing. Some practices include designating a representative from each department to sit on a procurement committee that consults regularly with the procurement department.
One of the most widely discussed procurement best practices is the use of e-procurement. E-procurement is an electronic method of purchasing supplies and services. Companies that purchase e-procurement software are able to receive product and service payments online.
E-procurement is considered a best practice because it can reduce overhead expenses by eliminating purchasing agent costs. This software also allows for customers to be contacted more easily online and helps reduce the costs associated with mass mailing. Making online purchase available also gives a company more exposure and makes a business more accessible to a larger clientele base. E-procurement software may also help organize billing, profit and loss statements and other financial records. This function alone can save on the additional costs of a regular bookkeeper. Purchasing e-procurement software may be the most effective method of cutting costs while improving business efficiency and communication.