The conceptual framework of “Best Practices”- irrespective of industry or segment is fluid. The practice and methods that work for one particular period may not work for another period. According to the business the processes must be modified time to time. The best example of the same is Material Procurement function for any business because it evolves according to the department and given responsibilities by the experts of the respective fields. Procurement of modern business era is pretty different from the early days.
Explaining few best practices for material procurement as follows :
1. The Evolution:-
The procurement practices have evolved to a greater extent. It consists of the various dimensions such as better spend visibility, quick delivery of material, decreased procure-to-pay cycle, cost saving, improved productivity and so on. This list shows that procurement evolution is certainly wide ranging. However, the organizations must focus on being “Active” rather than being “Reactive”.
2. The organizational alignment:-
The procurement activity should cover all the aspects of the business rather than just focusing on availing goods at the cheapest price. For example, all the business functions should align with procurement so that the procurement activities carried out according to the requirements of the respective functions.
3. Treat your vendors as suppliers:-
This is one of the best practices for the material procurement. Procurement department should have thorough knowledge of the suppliers, vendors and their business practices. They should tread the vendors and suppliers more as partners. This would improvise the interpersonal relationship between both the parties. Such long term relationships are beneficial for the organization to a great extent and also it would have positive impacts on the procurement strategy.
4. Minimize the risk and establish proper control levels:-
Keep the policies and processes realistic, easy to understand and follow. This practice will enhance the better compliance level. Along with policy formation, the company can ensure the proper risk mitigation as well in order to establish the control level. The organizations can follow certain simple steps such as identifying the risk elements in advance, calculating the risk probability, carrying out proper assessment and prioritizing the activities related to risk. Such pro-active steps will be able to assist the organizations in taking the preventive steps associated with risk.
5. Social Responsibility and Sustainability:-
The modern age procurement and supply chain leaders must focus on ethics. Is your vendor’s business philosophy is in alignment with your business philosophy? Is your vendor engaged in less desirable practices? Are your vendors associated with ethical sourcing or not? We need to have all the answers of above mentioned questions. It is not enough to just consider the cost factor in mind. But, the procurement department will consider the number of other facets as well and such evolution is the prime key for the procurement related best practices.
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