Procurement plays an integral role in the manufacturing sector. Without the involvement of effective procurement management, the business operations will fail miserably. The procurement management can appoint sourcing agents to manage the import of different products. In other words, it is the responsibility of the procurement management team to ensure that the services are properly aligned to the respective agents and suppliers while managing the necessary services and items for timely delivery. Without a pinch of failure, delivery of products must happen. The consumers must not find an issue to complain in regards to the company’s meeting the deadline.
The Relationship Of Procurement Management With A Business
Procurement is not only about business needs. Rather, there are more things that the organization can benefit from through an effective procurement management team. If handled properly, the team will be able to save a lot on the company’s overall capital investment, resources, and time. In simple words, procurement is one of the major oxygen providers to a business, through which it breathes. Efforts must be given to ensure that the best of experts are hired to be part of the procurement management team.
The Primary Role Of The Procurement Management Team
These managers are responsible for negotiating supplier and production contracts. They also spearhead innovative business processes and appoint sourcing subcontractors to handle specific operations in the business process. Apart from these areas, the management team can also be part of spearheading social responsibility norms in the corporate sector and ensuring that the best practices are followed when sourcing suppliers and products.
What Do Experts Have To Say?
Industry experts are of opinion that the procurement management team must not focus only on the cost. What matters more is focusing on the strategic implementation that will help in the overall business growth process while ensuring better revenue generation. In the last decade or so, key responsibilities for supply chain management have increased by leaps and bounds. More to say, procurement has been enlisted as a major segment in manufacturing organizations. With the inclusion of procurement within the supply chain domain, the entire process has become a lot more streamlined.
The Essential Steps Of The Procurement Process
The procurement process is not limited to a single step of purchase and payment. There is more to what the eyes can meet. Here is a detailed step-by-step way to the procurement process:
Specification And Planning
What is the need? The procurement management team needs to identify the needs and accordingly set the specifications. Once the specification is set, detailed planning will be conducted based on the available data. Whether there will be a need to appoint sourcing agents or the in-house team will be able to manage proceedings, this will be projected in this stage.
Supplier Identification And Selection Process
This is the stage where the management team will be focusing on the availability of suppliers. The focus will be given to the demands and how the suppliers will meet them. Look for suppliers, have a one-on-one discussion with each of them, and see whether the demands are being met effectively or not. Identify suppliers who are capable of meeting the business demands without ignoring the quality standards.
PO (Purchase Order Placement)
Purchase Order is a page that features the product specifications, estimated price, terms and conditions of the products for supply, delivery timeline, etc. The purchase order for a company is a legal document that highlights the requirement for the purchase of the items in association with the business needs.
At times, it becomes necessary to expedite the purchase/product order. It can happen due to different reasons, be it a sudden change in requirement, some natural circumstances, product obsolescence period earlier, or some other issues. It becomes crucial to focus on the delivery timeliness of the products. It will help in addressing certain issues like completion of the project, delayed delivery times, unclear payment dates, etc.
Purchase Receipt And Inspection Process
Procurement management will appoint sourcing subcontractors to review every order against the specifications in the PO, followed by carrying out a detailed quality check. The subcontractors will only place a nod of approval if the standards being specified in the PO are met to the core. However, if the requirements and standards are not met, a discrepancy report will be issued against the orders.
Clearing The Invoice For Payment
The subcontractors place a nod of approval and confirm perfect alignment of the document (invoice, PO, product receipt, packing slip, etc). Once done, the invoice will be passed OK for payment.
Maintaining The Records
All the records related to the purchase must be maintained properly. This is the responsibility of the procurement management team. These records will be verified during industrial audits. Also, these documents will help ease the re-ordering of the products. It will also confirm the product warranty.