Company Procurement Procedures

Procurement policies are vehicles for replenishing stocks of raw materials.
Procurement policies are vehicles for replenishing stocks of raw materials. (Image: Jupiterimages/BananaStock/Getty Images)

Procurement is an important part of any company's operations, providing necessary links between demand and supply. Successful procurement procedures ensure that all departments have the materials and supplies they need, when they need them, saving time and lessening stress. Ineffective procurement policies can lead to expensive cost overruns, wasted inventory and sloppy management of resources.

Tracking Inventory

Company procurement policies depend on having an accurate idea of how much inventory you have on hand so you know how much to order. Inventory tracking methods can range from visual assessments to determine whether you are running low, to computerized systems which adjust stock counts every time your cashier rings up a sale. Inventory systems should be implemented on a scale appropriate to your company's activities: you do not need a complicated database if you handle a single product and buy supplies from a single vendor.


Many companies implement procedures specifying a chain of approval for different types of procurement. A cashier at a grocery store will not have the authority to spend company funds on a new cash register simply because he is dissatisfied with the old one. In general, the larger and more significant a purchase, the more it is likely to require approval from a manager or owner with a broad view of company finances and budgeting. Purchases such as regular weekly inventory can usually be delegated to an employee familiar with the particular department.


Procurement procedures often involve an element of budgeting. In order to have a sense of how much to spend, an employee should know the extent of available funds. A procurement budget can be a fixed amount, such as $1,000 per month to spend on office supplies. A procurement budget can also be a percentage of gross sales. For example, a restaurant business aims to spend no more than one third of the amount of its gross sales on ingredients, so its procurement budget will vary relative to its weekly receipts.

Checking Invoices

Successful procurement also depends on checking orders upon receipt to make sure they contain all of the items on the invoice. Even well-intentioned vendors can miscount shipments, so your company can avoid losing money by comparing the quantities listed on your bill with the items that arrive in your warehouse. Check off items as you count them and report all missing items promptly to the vendor in order to obtain appropriate credits and refunds.

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