A Procurement Management Process, or Procurement Process, is a method by which items are purchased from external suppliers. The procurement management process involves managing the ordering, receipt, review and approval of items from suppliers.
The procurement management process will enable you to:
- Identify supplier contract milestones
- Review supplier performance against contract
- Identify and resolve supplier performance issues
- Communicate the status to management
Procuring goods and services from external suppliers can be a critical path for many projects. Often, the performance of the supplier will reflect on the performance of the overall project team. It’s therefore crucial that you manage your suppliers performance carefully, to ensure that they produce deliverables which meet your expectations.
This procurement management process will help you do this to get the most out of your external supplier relationships.
Factors Affecting Procurement
When setting procurement objectives, consideration should be given to the following:
- ensuring the supply of raw materials and other supplies- Procurement management can adopt several policies to ensure that supplies are always in the right place at the right time
- Vendor-managed inventory (VMI) – Where VMI is used, the vendor takes responsibility for the inventory held in the client’s premises. The vendor monitors inventory levels and organizes replenishment.
- the quality of supplies
- product specifications – procurement of sub-standard supplies can be avoided by developing the product specification
- the price – It involves various factors like negotiating skills of the purchasing team, quality of the goods, knowledge of the product being purchased and product availability
- the origin of the supplies – whether sourcing is domestic or international
- the method of supply, eg JIT-style deliveries
- the mode of transport used
- a hierarchy of importance, like routine purchase, critical or strategic items. eg key raw materials would have precedence over office stationery
- whether to make yourself or buy from a supplier