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Steps for Improving Procurement At Your Business 

Procurement is the process of obtaining raw materials or services for a business. The way in which the business goes about obtaining these goods plays a major role in profit out-put. If there is a poor acquisition method, it could either make or break the entire business operation. Procurement is effective at growing a business when done right, but when done wrong, procurement can actually end up costing a business. When procurement costs offset profit, the process is ineffective. Some actions often associated with procurement are; supplier vetting, smart buying, ordering, receiving, and reconciling differences between receipt and invoice costs. In my following blog I will discuss what the Best Practice for the procurement process is and how a business can improve its procurement process to, in the end, make the business more money. 

The Procurement Strategy 

Corporations in the 21st century have developed a candid approach to expansion through strategy. When looking at ways to create the best procurement practice, it is key for a business to hone in on aligning a proper procurement strategy with the current vision and corporate strategy in place. Differentiation is good, but when different departments of a business are working in different ways with different strategies, confusion arises and inefficiencies make themselves known. We can think of business like a sports team, you can acquire amazing athletes and star players, but if the players don't share the same strategy and play as a team, they won't win. 

In the same way, an effective procurement process shares similar strategies with that of the business. 

Formulating a Procurement Baseline

Now that a strategy has been built, in order to effectively use the strategy, a business has to create a baseline from which it is gathering its information. How will a business know if the procurement strategy is working if there is no baseline from which to compare from? Some things to think about while setting a baseline for the procurement process is to formulate data about suppliers, how you buy your product, logistics, and to focus on the ability to reconcile differences between receipts and invoice costs. 

Once a strategy and a baseline are in place effective tools can be put in place to strengthen the procurement sector of the given business. 

Tips for a Successful Procurement Process 

There are a variety of techniques and practices that a business can implement in the procurement process in order to strengthen the infrastructure of acquiring goods and services. Starting off, a business can implement an oversight board for procurement duties. This spreads out liability and brings multiple minds to the table when thinking about creative ways to make procurement less costly regardless of the size of business. A mistake that many businesses make is the utilization of talents. 

For procurement to be successful, it is imperative that the process is correctly staffed with work driven people who share the same vision on the process of acquiring goods and services. Many managers are afraid of change and moving towards technology. Technology can make or break a business in terms of efficiency. Computers take away human errors and can calculate things such as shipment costs and pay dates much faster than that of a human mind, make technology work for you. Just as customer service is highly indicative of a successful business, creating a customer service type of bond with your supplier helps. If you are able to create healthy alliances and bonds with your suppliers it will only help in the long rung when dealing with pricing. 

Finally, I believe that proper management and organizational skills are very important for the procurement process. With the ability of organizing business invoices and relationships in the right way, it can take away a pressing fear of procurement, losing suppliers or missing delivery dates. These are just some steps that can be taken at any level of business to strengthen the procurement process. This process shouldn't be overlooked due to the major dealings with materials and its relationship with profit control. 

By: Lucas Lipscomb 

TEKOA ERP Software 

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