How to ensure an effective procurement process for projects in your company

Making sure your company’s procurement process runs smoothly is like having a strong backbone for your projects. This is super important in industries like engineering and construction. Why? Because a good procurement process isn’t just nice to have—it’s vital for staying ahead of the competition, keeping your reputation solid, and moving your business forward. When you’re dealing with more complex stuff than just buying pens and paper, the risks get higher. Nobody wants things to go wrong. So, in this article, we’ll dive into how your company can set up a procurement process that works well for what you need.

Checklist: 10 criteria for selecting the right purchase order system

The key to effective use of resources 

Imagine what a well-functioning procurement process should entail. Good contracts, follow-ups, and strategies, to name a few. Yet, we often see even well-established companies facing challenges repeatedly. Why is that so? 

Even the best bakers can stumble if each step of the recipe isn’t handled with care. So, what are the core components that determine whether the procurement process is smooth or not?

Here are some important steps to consider: 

1. Clarification of needs and planning: Begin by clarifying the budget, defining the scope of delivery, and identifying the necessary resources. This lays the foundation for navigating the procurement process with clarity and precision.

2. Evaluation of bids and suppliers: Once the needs are clear, it’s crucial to thoroughly evaluate the bids. This includes assessing suppliers’ qualifications, references, and compliance with ISO certifications and quality objectives.

3. Negotiations and terms: After selecting a supplier, it’s time to negotiate prices, terms, and delivery times. Clear agreements and contracts are key to avoiding misunderstandings and disagreements later in the process.

4. Internal approval: Before placing an order, it must be internally approved according to the company’s guidelines. This step may involve multiple layers of approval, depending on the size of the procurement.

5. Order placement: Once approval is obtained, the order can be placed with clear specifications and conditions, including technical drawings and any agreed-upon terms.

6. Receipt and approval: Once the goods or services are received, they need to be inspected and approved before the supplier can send an invoice. This step ensures that everything meets the quality standards and matches the original specifications. It also lets you deal with any issues, like late delivery, by using agreed-upon actions such as liquidated damages clauses or other contract-based responses.
   
7. Invoicing and matching: Lastly, the supplier’s invoice needs to be matched and cross-checked with the receipt and purchase order (3-way matching). This ensures accuracy and reduces the chances of errors or duplicate billing.

8. Post-process evaluation: After the entire process is completed, it’s important to conduct a post-process evaluation to review the results. This helps in continuously improving the procurement process and pinpointing areas for enhancement in the future. 

How is the procurement process going in your company? Are you following the steps above, or are you facing the typical challenges along the way

Checklist: 10 criteria for selecting the right purchase order system

Challenges and opportunities 

While the steps above provide an overview of an ideal procurement process, companies often face various challenges that can delay or disrupt the process. Some of these challenges include unclear orders, long lead times, informal procedures, and lack of integration between different parts of the process. Do you recognize any of these pitfalls? 

Following the perfect recipe is easier said than done. Perhaps there’s a system that can simplify the entire process and take a few pounds off your shoulders. 

CostTracker is a tool that offers a solution for companies looking to streamline their procurement process. By integrating such a system into the procurement process, you can automate routines, reduce time spent on administration, and ensure that all involved parties have complete visibility throughout the process. The system provides clear orders, efficient invoice handling, and a holistic approach that can help eliminate many common challenges companies face.
 

Conclusion 

For project-based companies in the construction sector, an effective procurement process is a key component for success. By taking necessary precautions, implementing clear strategies, and using innovative procurement tools like CostTracker, you can boost efficiency, save costs, and gain better control over procurement. Investing in modern solutions that align with these principles turns procurement into an asset, not a challenge, during project execution. 

The opportunities are numerous, but how do you select the ideal procurement system for your company, industry, and typical projects?