Procurement Best Practices

Maintain an Updated Database of Prequalified Vendors to Reduce Vendor Selection Process Cycle Times

Best Practice (Good)

Maintain a database of prequalified vendors to consider during the early stages of the vendor selection process when purchasing products. Add all previously certified vendors into this list and keep it up-to-date. This not only reduces the overall amount of time the Procurement Department spends purchasing products, but it also reduces instances of rework as well as the likelihood that redundant vendors will be onboarded.

Typical Practice (Bad)

Have purchasing agents qualify vendors for each new purchase that is made, running them through the vendor setup process each time. This ensures that due diligence is performed and each purchase is validated before the transaction takes place. A small amount of rework should be viewed as - the "cost of doing business."

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Benefits:

Maintaining an updated database of prequalified vendors not only allows buyers to hand pick vendors who have already been qualified and have proven to be reliable, but it also reduces instances of rework (e.g., running an already prequalified vendor through the vendor setup process) as well as the likelihood that redundant vendors will be onboarded. In effect, such an updated list reduces the overall amount of time the Procurement Department spends purchasing products, which allows the needed materials to be delivered much sooner and prevents the number of onboarded vendors from becoming unmanageable.

Prepare Weekly Inventory "Hot Lists" to Improve Materials Availability

Best Practice (Good)

Prepare a weekly inventory "hot list" for the Procurement Department that lists which items are currently over- OR under-stocked to improve inventory management practices. Include all relevant data (i.e., metadata) about these items, such as retail price, cost, lead times, demand forecasts, etc. to ensure high informational accuracy.

Typical Practice (Bad)

Determine items that are over-/under-stocked by comparing data from weekly or monthly inventory reports and demand forecasts. Producing these reports in longer time frames would reduce the number of uneeded reports and free up employees to performing other, higher-valued tasks.

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Benefits:

Preparing a weekly inventory "hot list" for the Procurement Department improves storage efficiency by opening warehouse capacity for more high-value, demand-heavy materials, and greatly improves materials availability by ensuring that high-demand items are appropriately stocked. These lists should not only describe which items are currently over- OR under-stocked, but also all relevant data about the listed items (retail price, cost, lead times, demand forecasts, etc.) so as to ensure high informational accuracy. Preparing weekly "hot lists," furthermore, improves employee understanding of material availability which allows the Procurment Department to purchase needed materials before being asked.