5 Steps To Achieve An Effective Procurement Process

5 Steps To Achieve An Effective Procurement Process

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Procurement, as a business function, is an inevitable aspect of all business organizations.

To operate and aid expansion and optimization of overall performance, businesses especially within the supply chain industry, have to procure various goods and services from external suppliers.

Furthermore, if B2B organizations aim to harness the power of globalization, they need to work with the best local suppliers in every region for the best possible price to satisfy their requirements of external goods and services.

This renders the procurement function crucial for businesses and with an effective procurement process, it will ensure that the organization will achieve its tactical as well as strategic goals.

Achieving value for money is one of the main objectives of effective procurement practice, but it is often difficult to achieve this value for money when it comes to all procurement activities.

READ ALSO: F&B Business: How to Negotiate Payment Terms with Your Supplier

Here are the 5 steps towards a successful procurement process.

Step 1: Conduct An Internal Analysis

To begin, you’ll need to benchmark current performance and then identify the needs and targets before developing a procurement strategy.

This involves the collection of several different types of data which could be inventory database, purchase order database, customer database, market research data, product research data and more.

The purpose of collecting these initial data is to benchmark current performance, resources use, costs for all the departments/functions in the organization, and current growth projection.

Step 2: Conduct An Assessment on The Supplier’s Market

Next, the strategic procurement team identifies potential countries that are feasible sources of any required raw materials, components, finished goods or services.

If there are specific requirements, it may limit the number of suitable countries. For instance, if one of the raw materials used by the organization can only be found in one country, then options are much narrower.

For manufactured products, there will be a much wider range of potential countries from which to select. Services may also be limited by the technological requirements of the organization.

Step 3: Collect Supplier’s Information

It is important for a company to select suppliers carefully. But, why? A supplier’s inability to meet selection criteria can result in significant losses for the organization.

The business reputation and performance of the supplier must be evaluated, besides making sure that financial statements, credit reports, and references must be checked carefully.

If possible, your company should arrange to inspect the supplier’s website (if there’s any) and talk to other customers about their experiences with the supplier.

The use of agents, who are familiar with the markets and stakeholders, can also be beneficial to this process.

Businesses may select more than one supplier to avoid potential supply disruption, as well as creating a competitive environment.

This strategy is also effective for large multinational companies and allows you to have centralized control, but more regional delivery.

Step 4: Develop A Sourcing/Outsourcing Strategy

Based on the information gathered in the first three steps, a company/business has to develop its own sourcing/outsourcing strategy.

The following are examples of sourcing strategies:

Direct purchase: Sending a Request for Proposal (RFP) or a Request for Quote (RFQ) to select B2B suppliers.

Acquisition: Purchasing from a desirable supplier.

Strategic partnership: Agreeing with a selected supplier.

Step 5: Implement The Sourcing Strategy

Sourcing strategies that involve the acquisition or strategic partnerships are major undertakings.

In these cases, suppliers are likely to have these characteristics which are such as high involvement in activities that are core to buyers such as supplying limited raw materials or having access to highly confidential proprietary knowledge or even having a pool of talented labours.

What is SEO?

Search Engine Optimization (SEO), it pretty much speaks for itself. If used correctly, it will ensure the visibility of your website and your content on search engine results pages.

It’s an all-encompassing term used to describe anything to achieve these results, from link-building and social media marketing, to having your website itself embedded with keywords that will alert search engines.

How Does A B2B Business Use it?

Good SEO is a master of disguise. It sits on the website, hidden in plain sight of your visitors but staring them straight in the face.

It makes itself known to Google, Bing, and other search engines but doesn’t sacrifice your content. The key to generating more leads for your business is by optimizing your site for search engines.

There are plenty of simple things you can do on your website that can increase your sign-ups, be it in the form of free newsletters or paid subscription services.

Most don’t require any kind of technical or coding knowledge and some of these efforts, if done tactfully, can make a huge difference in the number of conversions you aim to get.

All in all, the five simple actions we discussed here can all be done in a matter of minutes. Essentially, when you break them down to their most basic ideas, it boils back to removing psychological barriers and offering better reasons to sign up for your target users.

Keep those two ideas in mind whenever you’re working on a signup page:

Does this make it easier to sign up?

Does this give a better reason to sign up?

If the answer is yes, then you’re likely going to see an increase in your conversions.

Try Dropee Today!

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Let's say that you have exhausted your internal resources and have yet to see any significant results, why not consider to get connected with several potential suppliers that you can browse on a single webpage?

Dropee can help you with this by allowing you to compare prices and review between multiple different suppliers on our B2B eCommerce Marketplace.

Equipped with a personal dashboard upon sign up, now you can view and decide which suppliers allow payment term and which doesn't.

Alternatively, you can always apply for Dropee's business funding amounting up to RM200,00 to help you with your cash flow when procuring inventories.

Wait no more, sign up HERE today!

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