Procurement activities are vital to any company. Therefore, over the years, managers started to consider such area with a more strategic view. Consequently, businesses that want to grow and intend to stay relevant in the market, should invest in procurement planning. Otherwise, they will run the risk of being left behind.
Therefore, more efficient acquisitions will minimize errors, reduce costs and provide expressive results. So anticipating procurement planning is the right thing to do. And to assure a successful process, managers must be aware of possible errors, which can be fatal to any operation and can compromise the results.
Want to learn more about procurement planning and how to make it more effective? See below the five mistakes you should avoid.
1. Bureaucratic approval process
While some companies work with messy processes, and teams that make quotations without any criteria, others are more bureaucratic and follow strict procedures, which delay decision-making processes.
Away from this scenario, finding a good balance and investing in a process that is aligned with the company’s goals is highly advisable. First of all, do some market research and hear experts on the best management practices.
The automation of this process, with the use of on-line platforms, is a resource recommended by experts in corporate procurement – as it contributes to bring more convenience and innovation to the sector, along with the alignment of internal operations with modern practices.
With the help of technology, procurement professionals can focus on more strategic tasks, and dedicate themselves to improvements that will contribute to company growth as a whole.
2. Buying products in improper quantities
Excess inventory accumulated in the company is synonymous with loss. Inactive products will impair working capital, and run also the risk of expiring.
Buying less than necessary poses risks too, and can impair production. Without the required inputs, the sector in charge won’t be able to manufacture the items.
Identifying the correct time of new purchases and the minimum order quantities are essential data, which must be analyzed by the sector, to ensure the efficiency of future acquisitions.
3. Lack of inventory control
Monitoring inventory levels makes all the difference. When planning your company’s corporate procurement, you must work together with the other areas of the supply chain, for an accurate balance of all materials that are kept in stock.
Updated information assures also that the procurement area is well informed, and that the company won’t run the risk of negotiating a non-existent batch of goods, for instance. This practice should be integral part of the industry’s routine, in order to avoid inconsistencies that will impair the company’s image with your consumers.
4. No tracking of performance indicators
KPIs (Key Performance Indicators) are crucial to monitor the performance of procurement processes. In fact, adopting performance indicators can raise productivity levels, promote more integration between the different areas of the company, and help to know the actual demands and priorities for your business.
Many KPIs can be used in procurement management – including supplier performance, buyer productivity, savings and purchase lead time. For a better use of such tools, managers must define which ones will be used, according to the company’s strategic goals.
Supplier appraisal without a technological system
Technology can be of great help for a better management of supply sources by the companies’ procurement area. After all, by persisting in rigid and manual processes, you can run the risk of hindering the procurement process.
e-Procurement tools automate the process of selecting and evaluating suppliers. This kind of solution assesses suppliers in a quick, practical and transparent way, and allows choosing those that really meet the needs of your business. This system enables also registering suppliers and optimizing negotiations.
Preventing these errors can avoid problems to your company’s procurement planning. Check internal processes, and invest in technology and good practices, to bring more efficiency to your procurement area.
Have you other tips for a good procurement planning? Make your comments along with your opinion!
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