When it comes to procuring goods and services at the best possible price, in the right quantity and quality, in the right place and from the right source, there are key essential factors that must be put in place to benefit from a good procurement management.
And without these key essential factors in place, all your time and effort invested in making sure that every procurement project is a success will be wasted.
So, what are these key essential factors of a good procurement?
The 5Ps of Effective Procurement Management
To guarantee a successful procurement management, these 5Ps listed below must be considered.
The first essential ‘P’ to consider is proposal because it’s the primary document issued at an early stage in a procurement process. And it is sent to suppliers inviting them to submit a proposal to provide goods or services.
So, to achieve a successful procurement project, proposal must be issued to ensure that responses from vendors meet the organization’s needs and are structured in a way that allows the organization to easily compare proposals and contract the right vendor.
The second ‘P’ is planning. To guarantee a successful procurement project, planning is very important. Why? Because it helps to decide what to buy, when and from what source. And it also helps to assign procurement method and the expectations for fulfillment of procurement requirements.
Just like the saying, “If you fail to plan, you plan to fail.” Careful preparations must be made ahead through effective procurement planning to avoid project failure.
The third ‘P’ is price. Price is very important when it comes to procuring at a valuable cost. It might not be as glamorous as promotion, but it is the most important decision procurement personnel make. It is important because it represents vendors’ assessment of the value customers see in the product or service and are willing to pay for a product or service.
So, the power and impact of pricing in procurement management cannot be ignored. By considering it, it will help gain price concession from your procurement vendor.
The fourth ‘P’ of procurement is people. A team of procurement personnel makes sure that the activities planned are carried out in line with current and existing requirements of the project. So securing the right people with the right skills cannot be ignored because it ensures the success of an effective procurement project.
The fifth ‘P’ is project management. Managing procurement project ensures that purchased items which are selected and acquired according to the specifications and requirements are delivered on time.
Meaning, project management is vital in achieving a successful procurement. Why? Because it helps to reduce the chance of a project failing; make things simpler and easier for procurement team with a single point of contact running the overall project. It also encourages consistent communications amongst staff and suppliers and help to keep costs, time frames and resources to budget.
Regardless of what the specific goal at hand is, it is increasingly necessary that these key factors are in place to benefit from an effective procurement management.
There are certainly other ‘P’ of procurement management that is not included in this post, join the conversation by sharing more.