The Importance of Procurement Best Practices | Supply Chain Visibility Best Practices

The Importance of Establishing Procurement Best Practices

August 3, 2009, 8:24 am

For companies looking to cut costs and get the most out of what they do spend, procurement strategies should be a key area of focus. One important best practice should obviously be to build a good relationship with your suppliers, in order to limit supplier bidding and price negotiation. This article from Supply Chain Management Review gives a good run-down of other procurement best practices: Procurement Best Practices—A Smart Way to Save Money.

A few highlights include:

Creating a pre-qualified supplier pool in which all suppliers are uniformly and objectively evaluated. This allows the buyer to hand pick suppliers and limit the pool to just those with which it has done business. Of course, others can be added, but the key is knowing the suppliers in the pool as a first level of quality control. You only want suppliers bidding on your projects that have proven that they can deliver quality work, on time.

Creating a fair bidding environment in which the computer matches buyer project specifications only with suppliers capable of doing the work. With detailed project and supplier data, the computer will automatically match each project up for bid with only those suppliers with matching capabilities. This levels the playing field.

Establishing full transparency by sending bid results to all suppliers that submitted a bid. This not only creates greater credibility for the buyer among suppliers, it also promotes improved competition.