You cannot start any purchase process within your organisation unless you have developed a procurement plan that guide and follows its provisions from the thousand to the end of the day.
The procurement plan helps you decide what goods you need besides who will secure them, when to buy them, and what quality is required in each commodity so that your warehouses do not fall hostage to accumulating unnecessary goods and losses.
This planning process is necessary to reduce purchase costs while maintaining the quantities of goods required and the desired quality standards.
The procurement plan also includes all procurement information, such as how the procurement process is carried out, what types of contracts are used, and delivery dates and services agreed between the seller and the buyer.
So, because the procurement plan protects your organisation from several risks and last-minute surprises, you need to be familiar with the foundations and steps of preparing a proper procurement plan for your organisation, which is precisely what you will learn in this article.
What are the elements of the procurement plan?
Suppose we want to put the procurement plan into a simple phrase. In case, it is the identifying process and consolidating the organisation's procurement needs along with a timetable of where and when to procure.
It also includes ensuring that servers, items or even materials purchased are in good condition and following the approved standards.
It is also essential that the procurement plan include several other key elements:
- Create specific metrics to be relied upon in judging the supplier's performance.
- Obtain a specific delivery date for agreed products or services.
- Establish a specific timeframe to comply with the project's launch plans.
- Develop a plan to manage product and procurement receipts.
- Manage the strategy on which the transaction and contracts will be built.
- Set the general regulatory standards for the project's procurement.
- Determine the type and number of suppliers involved in the procurement plan.
What is the importance of a Procurement Plan?
As procurement planning has proven successful in many organisations and companies, both private and government, all companies are racing to develop a strategic plan to better manage their requirements and needs.
One of the most significant achievements of successful procurement planning is to ensure that all of the company's requirements and needs are combined in one place to avoid any unintended dispersion or error.
In addition, with an annual procurement plan in place, the company will ensure that it receives a high-quality product at a lower price, especially with tendering or quoting as an essential part of the plan.
We cannot fail to note the prospect of creating a long-term vendor-buyer partnership if the procurement plan is effective and successful. This would streamline the subsequent procurement project and other future projects.
What are the main steps to developing successful procurement planning?
The general procurement product (GPP) should serve the business company's needs so that the supply chain flows smoothly and tightly.
So, for effective and successful implementation of your purchasing plan, you need to lean into general and global steps:
- Identification of the need for services or goods
Once the company's specific needs have been announced, a thorough and intensive search must be carried out to determine the quantity of supply required for products or services and place the financial cost involved in securing these needs.
The procurement officer is responsible for developing a financial plan appropriate to the requirements and a timetable for completing the procurement process.
- Search for potential sellers:
This step would be to prepare a list of a group of vendors capable of meeting all procurement supplies of the departments' reports that have been included in the schedule.
Then suppliers should send bid prices (bid price) to choose the most suitable offer using criteria such as quality, cost and the most appropriate timing for delivery.
- Determine the most suitable contract type
Improving your organisation's contract management is one of the essential steps to creating the procurement plan, especially as it considers the terms and conditions approved by the company, as it must be adhered to and choose the type of contract to suit it.
Several types of contracts are used to settle agreements between the seller and the buyer, but we cannot address them in a few lines. Moreover, this is not the focus of our talk.
- Appropriate risk management
In particular, there are many potential risks that the large committee responsible for the supply of resources may encounter. Such as impediments to shipping, disputes between the seller and the company, and miscalculations of the quality of resources.
That is, it is the responsibility of a successful procurement manager to take into account all obstacles that may delay the timely and timely arrival of the company's requirements.
- Specification of payment details
It is essential to determine how the payment will be made and the currency used in the purchase, such as whether the payments agreed upon between the seller and the buyer will be annual or monthly.
All these details regarding the payment amount will reduce disputes between the seller and the buyer and ensure no conflict between them.
- Identification of legal needs
This step is the last and most important because it guarantees that the seller and buyer will comply with the government laws on the purchase plan.
In particular, the importing company must abide by all consumer privacy laws and the General Regulation on Protection and Maintenance so that none of this legislation is violated and its resources do not fall under the government's custody.
Purchases today turn into a key and tactical function for all businesses, as each company has a variety of needs and purchase requirements that may differ from another, necessitating periodic and different procurement plans.
So, the steps listed in this article will enable you to make long strides and achieve higher efficiency in setting your purchase plan. You can also use some specialist courses in this area, such as the procurement course Uk, especially as it will be your right-hand man to develop a successful and effective purchasing plan for your company.