How to manage a procurement system?
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Here are some basic steps that you can follow to manage your procurement system effectively:
#1 Planning: With input from all the departments and based on existing data and projections, you need to estimate what products or services your organization might need. Specify features, process and time so you may know what, when and how items should be procured.
#2 Identify & Select Suppliers: Look out for suppliers that can meet your organizational needs. These can be your existing pre-approved suppliers or you can open bids for proposals to search for new suppliers.
#3 Negotiating & Contracting: Competitive bidding allows you to bag the best price and terms that the market can offer. Once you have the best bid, you can negotiate with that vendor directly and sign the contract.
#4 Placing the Purchase Order: This document, also known as source-of-truth, will provide all the necessary details of the order to the supplier such as date, quantity of the products, specifications, price etc
#5 Confirming the Goods Received: Conduct a three-way matching of purchase order, goods receivable note and invoice to make sure all the goods are received as per the required specifications and standards.
#6 Invoicing & Payments: Once all your requirements are met, procurement department can coordinate with the accounting department to clear supplier’s invoice by releasing payments.
#7 Record & Relationship Management: Maintain all the records for the auditing, tax purposes, product warranty and re-ordering. To keep a healthy relationship with the suppliers, provide feedback on their performance and discuss areas for improvement.
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