Guide to Building a Procurement Plan February 8, 2024

Procurement. It might not sound interesting, but for any organisation, it's the backbone of smooth operations. But without a plan, this essential process can quickly devolve into a messy, costly headache. That is where a procurement plan comes in, acting as your roadmap to acquiring goods and services efficiently and effectively.

In this article, you will learn:

The Key Benefits of Building a Procurement Plan

Cost Savings
Efficiency
Reduced Risk
Improved Vendor Relationships

Procurement Plan: A Step-by-Step Guide

Define Your Needs
Develop a Strategy
Map the Process
Seek Out Suppliers
Gather Proposals
Negotiate and Contract
Manage and Monitor
Close Out and Reflect

The Key Benefits of Building a Procurement Plan

A procurement plan can guide you through the process with clear direction on necessary steps, roles and responsibilities, and help you avoid detours that drain your budget and time. Here are some key benefits:

Cost Savings: By setting a budget and negotiating effectively, you can avoid unnecessary spending.
Efficiency: A streamlined process means less time wasted on approvals, communication breakdowns and delays.
Reduced Risk: Identifying potential risks and mitigation strategies upfront protects your organisation from unforeseen issues.
Improved Vendor Relationships: Clear communication and defined expectations foster stronger supplier partnerships.

Procurement Plan: A Step-by-Step Guide

Here are the essential steps to crafting a winning procurement plan:

Define Your Needs: Be specific about the required goods or services, including quantities, specifications and deadlines. Don't forget quality standards –consider the cost with functionality or durability.
Develop a Strategy: Decide on the procurement method (open tender, direct purchase, etc.), set a budget and establish evaluation criteria for potential vendors.
Map the Process: Outline each step, from requisition to contract and payment, assigning roles and responsibilities for each stage. Set realistic timelines to keep things on track.
Seek Out Suppliers: Conduct market research to identify potential suppliers who meet your criteria. Shortlist the best ones based on their capabilities, experience, and those with competitive prices. Leverage online resources, industry directories and recommendations to build a solid shortlist.
Gather Proposals: Issue R.F.P.s (Requests for Proposals) to shortlisted vendors, clearly outlining your requirements and evaluation criteria. Carefully assess their responses based on your pre-defined benchmarks.
Negotiate and Contract: Choose the supplier that aligns best with your needs and negotiate terms like price, payment schedule, warranties and service level agreements. Ensure the contract is clear, concise and legally sound.
Manage and Monitor: Keep a close eye on the supplier's performance, address any issues promptly and maintain clear communication throughout the process.
Close Out and Reflect: Inspect and accept delivered goods or services, process invoices, and evaluate the procurement process to identify areas for improvement.

Remember, a procurement plan isn't just paperwork—it's a strategic tool that sets the stage for successful project execution. Regularly review and update it to reflect changes in your organisation's needs, industry trends and best practices. You may consider enrolling in a training course to learn how to streamline the process and manage data effectively.

London Training for Excellence's Procurement and Contract Management Essentials Programme gives you insight into a procurement plan that transforms this essential task into a well-organised process, saving time, money and stress. Now, go forth and procure with confidence.

Written by London Training for Excellence Team