A procurement policy governs the process of acquiring goods and services to minimize expenses. The size of the company, availability of suppliers, and financial goals influence the selection of procurement systems, including e-procurement. A sound policy benefits the organization by keeping costs in line and can be adapted to meet changing circumstances.
A procurement policy is simply the rules and regulations that are established to govern the process of acquiring goods and services that an organization needs to operate efficiently. The exact process will seek to minimize the expenses associated with the purchase of those goods and services using strategies such as volume purchasing, establishing a pre-established list of vendors, and instituting reordering protocols that help keep low inventories without compromising the function of the operation. Both small and large companies as well as non-profit organizations regularly use some sort of procurement policy.
There is no right way to establish a sourcing policy. Factors such as the size of the company, the availability of suppliers to provide needed goods and services, and the company’s cash flow and credit will often influence the procurement approach to purchases. The size of the company can also make a difference in the formation of the procurement policy, as a small company may not be able to control the discounts on volume purchases that a large company can manage with relative ease.
Similarly, the company’s or entity’s circumstances and financial goals influence the selection of procurement systems. Some systems are simple manual processes using older methods such as a flip card system to track purchases, issuing items to various departments, and an inventory count used to plan future purchases. Today, electronic systems allow for all of these functions to be tracked automatically, including the automatic generation of purchase requisitions and orders when the levels of a particular inventory item drop to a certain level.
E-procurement is a common way of placing and tracking orders today. Suppliers establish network connections with customers that allow them to align with all procurement programs used by the customer and place orders automatically, using the Internet to establish the connection. Programs of this type also allow you to quickly track order fulfilment, delivery dates, and even review any existing procurement contracts.
Whether the procurement policy provides for the establishment of construction procurement procedures or regulates purchases made from a manufacturer or charity, a sound policy will benefit the organization by keeping costs in line and defining clearly how the purchases will be made. As the entity’s needs change, there is a good chance that the procurement policy will be adapted to meet those new circumstances. This is necessary to ensure that the policy continues to work in the best interests of the business or nonprofit and to keep the procurement process simple and orderly.
Protect your devices with Threat Protection by NordVPN
