When you are launching a new business, there are a million and one things on your mind to get right. Chances are, procurement is not near the top of the priorities list. In some respects, that is understandable. Most businesses start small, and, in all likelihood, procuring the necessary supplies seems a simple matter. Identify the need, find a supplier, order it, pay for it, done.
In those early months, you are probably right. If you have six or eight people and you are all working flat out on getting the sales strategy, operational flow, marketing campaigns, customer relationship management and all the rest working smoothly, who cares how, when or where you buy your bits and pieces to keep the wheels in motion, just as long as they keep turning.
The problem is that while start as you mean to go on is a well-known phrase, the converse also works – you tend to go on the way you start. If your procurement processes are ad hoc and haphazard to start with, they are going to stay that way. And it is far easier to start as you mean to go on than it is to introduce new processes further down the line and change established habits.
Develop a strategy
A procurement strategy doesn’t have to be rocket science. Here are some of the basics that it needs to include:
- Authority levels – who is allowed to spend how much, and who needs to sign off on it?
- Multiple quotes – how many quotes should be obtained, and what are the criteria for acceptance, keeping in mind that the cheapest is not always the best?
- Approved supplier list – are buyers limited to approved suppliers for certain things? How can new suppliers become approved?
Evaluating options
The whole topic of approved suppliers can be a double edged sword. Building up a business relationship with a supplier is great if it gets you discounts and means they will drop everything to deliver quickly in an emergency. But sometimes, all the benefit is with the supplier and none is with your business.
Take basic office supplies as an example. Many businesses heave a sigh of relief as they sign up to a supply agreement with the local firm – that’s one thing dealt with. Yet it can end up costing the company thousands when they charge full prices for things like ink cartridges that can be ordered from an online supplier like Printer Inks at heavily discounted rates.
Having approved suppliers is fabulous, but make sure the arrangement is strategically favourable for your business, or you might as well not bother.
Keep records
Everyone knows from personal experience that if you keep track of your expenditure it reduces. Record keeping on procurement is just as important for a fledgling business. There’s plenty of money going to be spent, and you need to be sure it is being used wisely. There is plenty of procurement software out there that can make the task simple and ensure accurate records.
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