Set Up a Procurement Department in 5 Easy Steps
A great business never settles. It’s always growing, expanding or improving its present ways. You definitely have a growing business if you feel the need to set up a procurement department, you fell overwhelmed and in danger of creating a burnout situation for your team.
Setting up a procurement department is an easier task if you consider the following tips:
1.Start with procurement policies
You should start by making two lists:
One with the approved personnel to make purchases or sign off on expenditures (make sure to include thresholds or buying limits).
The other one with procedures for all company purchases. Don’t overcomplicated, keep it simple for the start. You should also decide some limits for expenditures not requiring a purchase order.
2. Create the procurement workflow
Who initiates a procurement process? Is it various departments on individual needs? This means you have to decide if you want a centralized procurement department – procures all goods and services required by your company, or a decentralized procurement department – only coordinates strategic decisions, but defers responsibility for transactional operations to other units.
It’s also important to remember that you will need a receiving department and procedures associated with receiving goods against a purchase order.
3. Don’t forget suppliers
Something very obvious, right? But don’t overlook it. Gather your suppliers in one database and also consider what criteria you want to include in your background check for the new ones.
4. Procurement platforms are your friend
You should consider procurement platforms as a tool to help you organize and manage the time-consuming and repetitive tasks in procurement. Also, the right platform has to be within your budget and, very important, user-friendly. Investing in a platform is a long time investment, this is why the right tool has to be scalable and as useful today as in the future when your business might expand or will need to downsize.
A quick evaluation should include the following questions:
Does it have all the functionalities you need?
Is it adapted to the size of your organisation?
Is it within your budget?
Is it easy to implement?
Can it be effortlessly adopted by the team?
5. Clear the way
Reach out to the company execs and other departments to make sure the above steps are taken into account. Assemble the team, set your marks and start.