In any purchasing department there has to be procurement procedures. These are a group of directives that detail what can and cannot be done as well as how each activity must be undertaken.
Most companies publish their procurement procedures so that all can see them. It is not only companies that have procurement procedures, governments, local governments and even countries have them as well. They are the rules and regulations that keep purchasing legal and appropriate.
In all procurements, there are groups of standard procedures that are always defined and these are:
Procurement cost levels
Every company wants to keep their costs down so they limit who can order and how much they can order. Generally the higher the total order, the more senior the signature on the order.
These are a way of dealing with day-to-day inventory restocks that are not handled by automatic purchase orders. It is important that it is well known as to who may order, in what circumstances and at what cost and stock level.
The next most common of the procurement procedures is to dictate the ethics that people must embrace. These generally include:
These are generally used at all times, except when prior management agreement has been provided.
Value for money
Most companies have procurement procedures in place the emphasis on the need for value for money as opposed to taking the easiest, the cheapest or most attractive deal.
This is when numerous companies bid for a piece of work or new contract that usually has a high value upon it. The whole tendering process has to be fair and seen to be fair so there is usually a whole group of procurement procedures surrounding this activity. They are usually broken down to different rules for each level of contract value.
With paperless purchasing becoming more popular there are usually a slew of procedures that you have to follow, many of them especially deal with security.
Ad Hoc purchases
These are purchases that are not available from the normal suppliers or purchases that are not normally made. To ensure that the purchasing strategy is adhered to and that the maximum profit is still made, these are very heavily monitored and controlled.
As you can see – a lot of rules and regulations but all companies need them, most companies have them and everyone knows what they need to and can do. Doesn’t that make your company a much more profitable company?