How to Whip Your Internal Procurement Process Into Shape

Spend Matters welcomes this guest post by Amol Joshi, SVP of sales and business development at Ivalua.

Often times, procurement departments get too wrapped up with their external procurement efforts and lose sight of the internal procurement process. By neglecting internal procurement processes and overlooking employees' needs, organizations can create major problems, potentially affecting employee morale, productivity and overall efficiency. For instance, blindly cutting the budget used to purchase snacks for the employee kitchen or downgrading the type of laptops purchased in order to minimize costs will only frustrate employees.

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When reevaluating your internal spend budget this year, consider integrating some of these strategies in your internal procurement process:

  1. Stick with a standard process: Many organizations don’t have a standard internal procurement process and instead allow their employees to do their own ordering. However, this just enables rogue spending, resulting in miscommunication about what items need to be purchased and when they need to be replenished. Chances are, buyers will end up reordering items or purchasing the wrong goods, meaning more time and money spent on tracking and correcting orders. This is why it’s so important to have a clear set of guidelines and processes in place that pertain to internal procurement. The guidelines should outline everything from who is responsible for purchasing internal supplies to how employees can make a request for something to be purchased.
  2. Collaborate with department leaders and HR: Some organizations offer perks that range from providing the latest tablet to hosting catered lunches. These expenses are usually unplanned and fall under the responsibility of the department leader who pays for it out of their budget. If department heads are in charge of perk expenses, it’s crucial to keep procurement officers in the loop.
    In addition to department leaders, procurement also needs to work in tandem with HR. Some organizations feel increased pressure to accommodate various lifestyles and expectations – such as childcare facilities or paying for employees to use the on-site gym. The reality is, however, that they won’t be able to please everyone. Procurement officers can help HR managers effectively decide which perks the company can realistically offer, as well as assist them in communicating the decision process to employees. Collaboration among HR department heads and procurement will make spending more efficient and business objectives easier to maintain.
  3. Minimize approval chains: More expensive costs, whether it be sending an employee to a conference or purchasing a new software program for a team, may require additional approval from different managerial levels. This means that managers will have to wait for the right person to sign off on the expense, which could significantly delay the overall process. Instead, organizations should consider adopting a cloud-based system that removes the need to shuffle paper proposals between managers and department heads. Having a system that is easily accessible and simple to use can speed up the approval and purchasing process drastically.
  4. Set purchasing parameters: As mentioned above, approving every item on a company’s internal "grocery list" ends up being a huge undertaking for those with approval power, and may also cause a major backup.

In order to speed up the process, companies should allow employees to purchase select items under a certain price point. For example, employees looking for products or services that cost under $150 should be able to procure them without written approval. Doing so enables line of business employees to procure the necessary goods while also freeing up managers to spend time on more pressing matters. If spending habits are a concern, department managers or procurement officers can run audits from time to time to see whether or not rogue spending is taking place.

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