Procurement management

1. Procurement Management
By:- Prateek Kumar

2. Hi Friends..!!
My Name is Prateek Kumar.
In professional I am working in Procurement and Supply Chain
Management Department since last 7 Years +.
This is my area of expertise. And this is my passion! I spent more
than 7 Years actively contributing to procurement development
of large size OEM like (John Deere, TATA MOTORS), being
responsible for sourcing 15 Cr.
And wherever I was working- my goal is to bring Procurement to
a better level, to use the leverage effect of purchasing and power
of supply chains for reaching companies’ success and improving
the bottom lines of the companies.
I truly believe in power of Procurement organization for the
success of the entire company, and I want to spread my
knowledge and experience to all over world.

3. What is Procurement??

4. Procurement Management
Procurement management is the systematic approach used for
buying all the goods and services needed for a company to stay
sustainable. Manage your procurement well, and it will add
value to all your business practices and save you both time and
money.

5. Importance of Procurement
Procurement Management is a key
factor to running a successful
company because it helps you meet
business goals and live up to
stakeholders’ expectations.

6. Major roles of Procurement
1. Identification of need
2. Finding and qualifying the suppliers
3. Requesting proposals
4. Negotiating with suppliers
5. Contracting
6. Delivery
7. Analyzing results

7. 1. Identification of need
When the company needs goods/services, the company’s needs
must be identified in order to choose which type of service or
product will fit best. Then the buyer needs to find them at the
best quality for the best price while also making sure the supplier
is able to deliver.

8. 2. Finding and qualifying the suppliers
Using the Internet or your supplier databases, you assemble a list
of all potential product and/or service providers. Sometimes it’s
useful to run RFIs or gather additional information, like years on
the market and turnover rates, to pre-qualify suppliers.

9. 3. Requesting proposals
To make sure you buy the products or services under the best
conditions – price, quality, etc. – you request proposals. Based on
the results, you know with whom to start negotiations.
The RFP results can be considered an overview of current market
capability.

10. 4. Negotiating with suppliers
To achieve the best conditions regarding prices, terms and
delivery, you negotiate with suppliers. It’s especially essential if
it’s the first time you are working with them. This process can
help you evaluate their trustworthiness as well.

11. 5. Contracting
If both parties, the buyer and the supplier, agree on all terms
(pricing, delivery, quality, etc.) you can make it official by signing a
contract.

12. 6. Delivery
Throughout the delivery process, you need to evaluate the
products and services delivered to ensure they are what you had
planned to buy, they meet your quality standards, they arrive on
schedule and you are charged the prices outlined in the contract.

13. 7. Analyzing results
Once the project is complete, it is essential to analyze the process
and evaluate its success as well as record observations for future
projects. You may need to present the outcomes to company
management or relevant stakeholders. The results can be used
the next time you need to make a similar purchase.

14. Responsibility of Procurement

15. Procurement Management Actions

16. 1. Plan

17. 1. Plan
• Procurement management starts with figuring what your
company needs to achieve its long-term business goals.
To do this, start by meeting with company executives and
stakeholders (i.e. finance, company owners, marketing,
production, suppliers, customers of the procurement
department customers, etc.) All of these stakeholders usually
have specific needs with regards to procurement
management.
The procurement team should be aware of what is needed to
satisfy the needs of internal, as well as external, customers.
Once this is done, formulate your findings into one document.
These guidelines will become your procurement policy, which
will help you execute the processes.

18. 1. Plan
• Business goals and objectives – The primary goal of a smooth
procurement management process is to help the company achieve its
business goals. Once these goals are defined, you find ways to help
meet them through better procurement management.
• Stakeholder needs – Our stakeholders usually have specific
expectations and needs with regards to procurement. The best way to
define them is by meeting with these stakeholders, using surveys or
hiring external research providers. This should be an ongoing process
since needs and expectations may change frequently.
• Current capability – Analyzing your team and current procurement
process capabilities will help you understand where you are today and
what kinds of skills, resources and tools are needed to execute plans in
the future.
• Procurement policy – Formulate all your findings and plans into one
document. These guidelines, which can now be called your procurement
policy, declare how all processes have to be carried out.
The policy should be presented to all parties involved. Then the
company board signs it, and the company begins to follow it for all
procurement processes.

19. 2. Align

20. 2. Align
• Value your procurement team and work to keep them highly
motivated, informed and trained.
• At the same time, ask yourselves if your current team has all
the necessary skills, motivation and resources to carry out the
processes defined in the procurement policy. You may find
that you need to train team members, increase their
motivation or supplement their resources. Make sure the
team has deep knowledge of the specific industry areas
required to procure the needed goods and services for the
company.

21. 2. Align
• If you need to hire new team members, look first inside your company and then look at
external options.
• Skilled Team – Procurement is in a constant state of flux. The industry you operate in as
well as modern procurement methods, software and big data are changing the
procurement landscape. You need keep your team on top of the latest developments
through training and participating in professional organizations and industry conferences.
• Motivational Work Environment – Your team should participate in analyzing and planning
procurement processes, ensuring they are aware of the steps required to document and
complete the processes without delays or confrontations leading to discontentment and
subpar productivity. You should run regular employee satisfaction surveys and use the
results to keep the work environment as motivational as possible.
• Strategic partners – They are suppliers with whom you have a close relationship and your
wellbeing depends on the products and services they deliver. You need to develop your
long-term plans and strategies together with your strategic partners, treating them as if
they were team members you can’t afford to lose.
• Centralized, decentralized and central-led procurement process – You should decide what
is the best way to set up the procurement management processes in your company. It could
be centralized, where all the activities are run by the procurement department, or
decentralized, where every department is in charge of their own activities, or center-led,
which is a combination of the two.

22. 3. Procure

23. 3. Procure
• Now you need to set up a streamlined and efficient process to
support your highly motivated, skilled team. This way you
make sure they focus on satisfying the needs of their internal
customers and don’t waste time dealing with bureaucracy.
• Selecting the right tools will make it easy to follow the
procurement process, get a real-time overview and reduce
manual work, saving buyers’ valuable time.

24. 3. Procure
• The following methods should be part of your communication with suppliers. When
dealing with strategic partners, the process can be even more personalized.
• Finding suppliers – You should constantly refresh your supplier list by looking for new
ones online, at trade fairs, etc. Doing that ensures you keep bidding competition high
and find vendors that can give you a competitive advantage over your rivals.
• Tender and RFP processes – You should use tendering methods like RFPs, RFIs, RFQs
and reverse auctions to qualify suppliers and ask for bids. Based on their bids you can
filter out the suppliers that will help you acquire the highest quality and cost standard
products and services on the market.
• High and low value requests – For running strategic and high value requests you can
use more qualitative methods. Running these requests requires skills, tools, attention to
detail, and more resources. Your low value requests may be run by more quantitative
ways: for example, by selecting the best of three received bids.
• Negotiations – You should use qualitative procurement methods to determine if
suppliers are trustworthy and their products/services are of top quality, to negotiate
price, and to minimize delivery risks.
• Contracting and delivery – Once you select the best product/service provider, sign a
contract with the terms that both parties have agreed to. After starting to work
together, constantly be on the look out to make sure the products/services are
delivered on time and with the expected quality.

25. 4. Manage

26. 4. Manage
• To keep the procurement processes transparent for buyers,
suppliers and stakeholders, it’s essential for the executives
(procurement managers) to have a full overview of the process. This
ensures accountability, helps improve procurement processes and
allows them to coordinate the team’s workload.
• You need a clear chain of command in order to achieve
accountability and define measurable objectives for the team. Then
you should consistently and transparently follow up on those
objectives.
Keep all involved parties well informed about the processes,
including benchmarking and reporting. This means they should be
clearly visible and not done behind someone’s back.

27. 4. Manage
• Supervising procurement – Make sure all the processes are run according to the
procurement policy and best practices for eliminating the risk of fraud and maverick
spend. All involved parties should be well aware of the processes being supervised.
• Analyzing processes – To improve your activities, periodically analyze your ongoing
procurement activities, like RFP processes, spend across different categories, low value-
vs. high-value requests, team performance, etc. You should have all this information on
one central procurement dashboard.
• Benchmarking and KPIs – Measure your success by consistently monitoring the
performance of KPIs and set up a benchmarking process. These are the metrics that
reveal the success of procurement management.
• Reporting – The procurement manager reports at set intervals to company
management, to other stakeholders and to the procurement team. By keeping the
process transparent, you can make sure all involved parties are on the same page.
• Ongoing procurement improvement – To deliver top performance, refine our
procurement processes when necessary, but also understand that this is an ongoing
task. For example, some improvements may require rewriting the policy, others may
require better coordination of team resources.

28. 5.Enjoy

29. 5.Enjoy
• Successful procurement management has a lucrative impact on a
company’s processes. It helps stakeholders meet their goals. It also
helps minimize supply chain risks by better collaborating with
strategic partners and providing added value to all business
practices.
• The positive impact on your business processes can be seen in
higher quality product/service inflow, on-time deliveries and cost
savings, which keeps your supply chain sustainable.
By streamlining these processes, you will notice fewer business
risks and hold those involved in the processes accountable, which
will guarantee quantifiable results.

30. 5.Enjoy
• Helping meet business goals and stakeholder expectations –
Procurement management helps you rise to meet stakeholders’
expectations and meet their needs. It helps them perform on higher level
and also helps them meet business goals in the long run.
• Savings – Savings can be achieved in a variety of ways, like reducing
delivery errors or increasing quality of products and services. You can also
measure the direct cost and the team timesaving achieved through better
procurement management.
• Higher value and lower supply chain risks – Building closer relations with
your strategic partners will minimize supply chain risks. Combining your
strengths with partners’ helps find new innovative solutions to stay ahead
of the competition.
• Streamlined and easy to follow processes – You should value a full
overview of simplified, standardized processes that are easy to follow for
both management and buyers.

31. Thank You
Happy Learning……….!!