Procurement Department Best Practices

Proven Procurement Leading Practices to Adopt

  • Best Practices (#104) / Procurement / Vendor Identification & Management

    Best Practice (Good)
    Maintain a database of prequalified vendors to consider during the early stages of the vendor selection process. Add all previously certified vendors into this list and keep it up to date.
    Typical Practice (Bad)
    Have purchasing agents qualify vendors for each new purchase that is made, running them through the vendor setup process each time.
    Benefits: Allows buyers to hand pick vendors who have already been qualified and have proven to be reliable to eliminate the step of prequalifying new vendors.
  • Best Practices (#105) / Procurement / Vendor Identification & Management

    Best Practice (Good)
    Encourage competition between suppliers by sharing contract rates and other supplier information with competing parties.
    Typical Practice (Bad)
    Do not communicate supplier information and rates to other, competing suppliers. Use this information for internal analysis and planning only.
    Benefits: Reduces the cost of purchases and improves the bargaining position of company buyers.
  • Best Practices (#106) / Procurement / Vendor Compliance & Audit

    Best Practice (Good)
    Reduce the number of contracted vendors and aim to work with vendors who provide multiple services. Implement milestones for newer vendors to set requirements from the beginning.
    Typical Practice (Bad)
    Contract multiple vendors for similar products and services. For example, though a vendor can supply both computer hardware and software, two separate vendors for each product should still be contracted.
    Benefits: Lessens the amount of contracted vendors while ensuring the company aims for a quality over quantity approach with vendors. Using multiple services with vendors can often lead to volume discounts.
  • Best Practices (#107) / Procurement / Vendor Compliance & Audit

    Best Practice (Good)
    Develop a standardized checklist that is used to assess the quality of both current and potential vendors/suppliers. Ensure that this checklist is updated on a regular basis and that all vendor compliance staff members have access to the latest version.
    Typical Practice (Bad)
    Allow purchasers and vendor compliance/audit staff members to judge current and potential vendors based on a non-standard set of evaluation criteria that oftentimes differs based on the evaluator.
    Benefits: Using a standard checklist, or scorecard, to judge each vendor ensures that all factors are taken into consideration when selecting a supplier. Using this standard assessment system continuously also allows for apples-to-apples comparaions of vendors/suppliers.
  • Best Practices (#108) / Procurement / Strategic Sourcing

    Best Practice (Good)
    Combine both statistical modeling and collaborative forecasting (input from key marketing, sales and supply chain employees) when developing demand plans, and assign accountability for forecast accuracy to individual employees or small teams.
    Typical Practice (Bad)
    Use detailed statistical models to perform demand forecasting and adjust those models monthly based on how accurate the demand for the previous month was.
    Benefits: Improves accuracy of demand forecasts by combining hard statistical data with the input of experienced supply chain professionals. Also places responsibility of forecast accuracy on the shoulders on individuals, increases the incentive to capture accurate data, improves demand models and includes collaborative forecasting.
  • Best Practices (#109) / Procurement / Strategic Sourcing

    Best Practice (Good)
    Hold quarterly meetings (online conferences or face-to-face meetings) with key suppliers to address how each supplier excels and where to better innovate to meet the needs of the company.
    Typical Practice (Bad)
    Assess each supplier’s performance on a yearly basis by holding meetings with purchasing staff to come to a consensus on the overall performance of each individual supplier.
    Benefits: Eliminate unmet procurement needs on a timely basis by encouraging supplier innovation and fostering collaboration between buyers and sellers.
  • Best Practices (#110) / Procurement / Logistics Management

    Best Practice (Good)
    Only certify and onboard suppliers that use advanced shipping notifications (ASN) to ensure that receiving employees know the expected arrival time and contents for each specific purchase order.
    Typical Practice (Bad)
    Make 'educated guesses' (based on vendor communications) as to when shipments will arrive at warehousing and production facilities and off-load them based on receiving employee availability.
    Benefits: 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.
  • Best Practices (#111) / Procurement / Logistics Management

    Best Practice (Good)
    Prepare a weekly inventory “hot list” for the Purchasing Group that lists which items currently are over- OR under-stocked. Include all relevant data about these items, such as retail price, cost, lead times, demand forecasts, etc.
    Typical Practice (Bad)
    Determine items that are over-/under-stocked by comparing data from weekly or monthly inventory reports and demand forecasts.
    Benefits: 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.
  • Best Practices (#112) / Procurement / Logistics Management

    Best Practice (Good)
    For large-scale, high-distance shipping operations (especially international operations), create lasting partnerships with third parties such as customs brokers, freight forwarders and other logistics providers. Choose partners based on the best value rather than the lowest cost.
    Typical Practice (Bad)
    Set up shipping facilities across regions globally to control the transportation of company goods and services, and use third-party logistics services sparingly. When a third party must be brought in, focus on low-cost solutions.
    Benefits: Leverages expertise of regional third-party logistics providers with more experience in their particular region or area of operation. Mitigates risk by transferring partial responsibility to third-party logistics providers

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