How to Streamline a Purchasing Process

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Streamlining a procurement process requires creating specific purchasing steps to minimize the time between when a person requests an item and when he receives it. Based on your current purchasing process, you can streamline your system by changing who’s involved, granting more purchasing authority and establishing specific vendor policies.

Identify Weaknesses

  • The first step in streamlining your procurement process is identifying why you want to do so. You might be overspending. Your employees might be less productive because they have to wait for the equipment they need. Your customers might be unhappy because you can’t get materials fast enough to fulfill orders. Your forms or even the lack of efficient paperwork might be causing bottlenecks. Once you know what your purchasing problems are, you can examine your process to see what might be causing the problem.

Centralize or Decentralize

  • One way to streamline your purchasing process is centralizing it with one person or department. Instead of having a staff member go to her department manager, who then goes to the chief operating officer, who then goes to the finance manager, allow employees to submit requests directly to one procurement agent. This can reduce the time it takes to get purchases approved because one person is responsible for the timeline.

    If you already have this type of centralized purchasing process, however, this might be your problem. This can happen when the purchasing agent is overwhelmed with requests she has to research. If this is the case, consider having department heads approve purchases first, which they then submit to the finance department. To make the most of this type of system, create a “due by” date for all of your forms to ensure that all involved know when an order is due and know they will be held accountable.

Increase Purchasing Authority

  • Another method for streamlining purchasing is to give more employees the authority to make purchases. This can lead to overspending if you don’t set specific parameters, such as what goods and services a particular employee can purchase, a cap on the amount of purchases he can make and what vendors he can use. Consider allowing employees the authority to make smaller purchases, especially regular ones that are usually approved, such as office supplies. If you can control company credit card use by individual employees, issue cards to staff members with purchasing authority, allowing them to make online, brick-and-mortar or phone purchases without having to request a check or credit card purchase from the accounting department. Create strict company policies for company credit card use.

Pre-Approve Vendors

  • If staff members need to research and confirm vendors each time they make a purchase, create a list of approved vendors they can use. This helps ensure you work with suppliers you know and may create volume buying that can lead to vendor discounts. Set up a purchasing system with approved vendors so they don’t have to run a credit report on you each time an employee makes a purchase. Give the vendors a list of employees who can make purchases, or use a company purchasing code you give to select employees. A request for proposal form or template that your employees can use when they need to get multiple bids on a job will streamline the process by eliminating the need for staff members to create bid documents.

Improve Purchase Scheduling

  • If you know in advance you need to purchase specific goods and supplies, schedule these purchases during slow times at your company, well in advance. This can help reduce purchases getting lost in a sea of paperwork, requiring department-level inquiries and expedited requests. Have your department managers submit quarterly purchase requests, including delivery dates, and have your purchasing agent create a calendar for making purchases.

References

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