Whether you’re starting a new business or looking for new suppliers to help grow an existing company, procurement management is just too important to leave to chance. Just like you wouldn’t set off on a road trip without checking Google Maps and making sure you have enough gas money, your business shouldn’t embark on a third-party supplier relationship without a procurement management plan.
But how can you put together a procurement management plan that will let you manage this business-critical function effectively and efficiently? Think about your company’s position in the market and what you need from suppliers in order to fulfill your value proposition and successfully compete with rival businesses. Then break your procurement management process down into steps that project managers can follow to source suppliers and establish strong relationships with them.
Consider Your Company’s Market Position
Your company’s market position defines the customer demographic you’re trying to reach, the value proposition you have to make, and how your products and services rank among those of your competitors. In order to source the third-party supplier relationships you need to appeal to your target market, offer them your unique value prop, and rank high among your competitors, you need to look for suppliers that share your company’s values and excel at providing the supplies and materials you need at the price point you need to meet the needs of your target demographic.
That might mean that you need to work with suppliers who have a strong focus on customer service and share your dedication to building strong relationships with customers, even if that supplier’s materials and products (understandably) cost a little more. Or, perhaps your value proposition is that your products and services cost less than the competition’s — in that case, you’ll need to choose a supplier that can offer a lower price for their services. Regardless of where your company stands in the market and what you’re trying to offer to customers, you need to know your position in order to find the suppliers that will help you reach your goals.
Break Your Procurement Management Process Down into Bite-Size Pieces
Ideally, a strong procurement management plan should make it relatively easy for project managers, contract managers, executives, and others in the procurement arm of your organization to source suppliers and negotiate those supplier relationships. Start by defining all of the roles involved in the procurement management process. Everyone involved in the procurement process should understand the scope of their work and their role in procuring each new relationship — and managing it after the Make risk identification and management an important part of the procurement process. Negotiations with any prospective supplies should include detailed talks on what you and the supplier will be doing for each other to mitigate risk. It’s always a good idea to assign a procurement team member to identify and mitigate the risks that are inherent in every third-party relationship.
Read More: 4 Essential Skills for Procurement Managers
Of course, there’s much more that goes into procurement management. You’ll need a plan to estimate costs and develop requests for proposals (RFPs). That will include coming up with project schedules and deadline dates and details of how the vendor will meet their obligations. You’ll need to then outline workflow processes for the project and get them approved. You’ll need to set up protocols, strategies, and staff for managing the vendor. And, finally, you’ll need a process for reviewing and approving any documents related to the procurement of a specific vendor.
You’ll have a lot of documents to manage throughout the procurement process, and even after, so you’ll need some document management software designed with the needs of procurement in mind. With the right software, you’ll be able to keep track of contracts, RFPs, invoices, receipts, quality assurance documents, and any other documents you might need — and you’ll have the tools to monitor contract deadlines and terms as needed from a single dashboard.
Successful procurement management can help you build the strong third-party relationships your company needs to survive and thrive in today’s competitive, cutthroat marketplace. With the right procurement management plan in place, you’ll find that many of the hiccups of onboarding a new supplier go away on their own.