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Take a crash course on smart purchasing practices. https://lnkd.in/djzUJGQY #purchasingprocess #purchaseprocess #procureprocess #procurement

Procurements KPIs : Procurement ROI = This KPI measures the financial gain from procurement activities relative to the investment. It evaluates how effective procurement contributes to financial performance. ROI = (Annual cost savings / Annual procurement cost) Purchase Order Cycle Time: Tis KPI measures the time it takes to fulfill on order from requisition to delivery. P.O.C = (time the was received -time the order was placed/total number of orders shipped.) Emergency Purchase Ratio: This KPI quantities the frequency of urgent orders placed by the company. E.P.R = (the number of emergency purchases/total number of purchases over a fixed period of time). Supplier Defect Rate: The supplier defect rate measures the proportion of faulty of substandard products from a supplier. It helps to identify the types of defects and their root causes. S.D.R = (total number of substandard products/total number of units inspected). Compliance Rate: The compliance rate is a measure of how well suppliers adhere to their contracts with buyer. C.R is calculated by comparing supplier invoices & Prices. Vendor Availability: This KPI measures a supplier’s ability to meet urgent needs and indicates their reliability. V. A= (number of times items were available with vendor / total number od orders placed with vendor). Inventory Aging : Inventory aging indicates shows how long time have been in stock. It helps to spot slow moving inventory & associated storage cost. Average Age of Inventory = (Average cost of inventory at its present level/Cost of Goods Sold × 365)

The procurement cycle refers to the series of steps or stages involved in acquiring goods, services, or works from external sources. These steps typically include: Identifying Need: The process starts with identifying the need for goods, services, or works within an organization. This could be triggered by various factors such as new projects, replacement of existing items, or expansion plans. Requirement Specification: Once the need is identified, detailed requirements are specified including technical specifications, quantity, quality standards, delivery timelines, and any other relevant criteria. Vendor Identification: In this stage, potential suppliers or vendors are identified who can fulfill the specified requirements. This could involve market research, issuing requests for information (RFIs), or leveraging existing vendor relationships. Vendor Evaluation and Selection: The identified vendors are evaluated based on various criteria such as cost, quality, reliability, past performance, compliance, and other factors. A selection is made based on these evaluations. Negotiation: Negotiations are conducted with the selected vendor(s) to finalize terms and conditions, pricing, payment schedules, delivery schedules, and any other relevant aspects of the contract. Purchase Order: Once negotiations are completed and terms are agreed upon, a purchase order is issued to the selected vendor(s). The purchase order formalizes the agreement and specifies the details of the purchase including quantities, prices, delivery dates, and other terms. Fulfillment: The vendor(s) fulfill the order as per the terms of the purchase order. This may involve manufacturing, sourcing, or providing the required goods, services, or works. Receipt and Inspection: Upon receipt of the goods or completion of the services/works, they are inspected to ensure they meet the specified requirements and quality standards. Any discrepancies or defects are addressed with the vendor(s). Payment Processing: Once the goods/services are accepted as per the terms of the purchase order, invoices are processed and payments are made to the vendor(s) based on the agreed-upon payment terms. Supplier Performance Evaluation: After the procurement process is complete, the performance of the vendor(s) is evaluated based on factors such as quality, timeliness, responsiveness, and adherence to contractual terms. This evaluation helps in improving future procurement decisions and vendor management. These steps may vary slightly depending on the organization, industry, and specific requirements of the procurement process. Additionally, modern procurement practices often involve the use of technology such as procurement software and e-procurement platforms to streamline and automate various stages of the procurement cycle.

Procurement Procedures Investopedia defines procurement as obtaining or purchasing goods or services, typically for business purposes. SAP states that procurement is the process of sourcing, purchasing, receiving and inspecting all goods and services your business needs to operate. This includes raw materials for production, technology and office supplies. From these definitions, we can see that procurement is about purchasing the required materials or services needed by an organization, whether large or small. It involves the following; 1.     Determining the materials, products or services needed, urgency of their use and frequency of their use. That way you can prioritize and focus on purchasing what is most important at the moment. For example, in production there are materials that are of utmost importance to production, procurement ensures that these materials are purchased on time without delay. 2.     Preparation of the list of required items, listing them is important for references. 3.     Supplier research, which means looking for the right suppliers if you do not have any, this applies to new products, new business owners and in cases where your supplier is no longer in business. 4.     Reaching out to your old suppliers, if you have any. 5.     Filling out purchase request and asking for quotations from the various suppliers. For small businesses, prices can be given via WhatsApp, emails, referrals to Instagram pages of the suppliers. 6.     Price negotiation, which includes cost per goods, discounts given. 7.     Quantity negotiation most especially when there is scarcity of the needed products or materials. 8.     Delivery negotiations. 9.     Payment processing.

9 Steps in the #procurement #process Procurement processes vary greatly depending on each company’s structure and needs, but generally include the following nine core steps: 1.     Identify which goods and services the company needs. 2.     Submit purchase request. 3.     Assess and select vendors. 4.     Negotiate price and terms. 5.     Create a purchase order. 6.     Receive and inspect the delivered goods. 7.     Conduct three-way matching. (Accounts payable should conduct three-way matching by comparing the purchase order, order receipt or packing list and invoice.) 8.     Approve the invoice and arrange payment. 9.     Record keeping. #procurement #procurementjobs #procurementmanagement #procurementstrategy #procurementmanager #ordermanagement #purchasing #purchasemanagement

What if getting the tools and supplies you need for your projects could be hyper-efficient and completely transparent? Purchase requisition forms are a vital part of that process. #purchaseorder #transparency #purchasemanagement https://lnkd.in/enUP-cHf

Here's a quick cheatsheet to help you find the best purchase order approval process template for you. Which do you think applies best to your company and why? #accountspayable #procurement #purchasing

The Benefits of Purchase Orders: • Enhanced expenditure control through the Requisition system’s approval workflow. • Establishment of requisition groups for managing approval levels and budgets. • Quick transformation of approved requisitions into Purchase Orders. • Use of blanket purchase orders with a call-off feature. • Retention of original and revised dates for tracking supplier performance. • Follow-up codes and dates to speed up purchasing processes. • Cross-referencing supplier stock codes with pricing for efficient processing. • Customizable stationery formats for company-specific order documents. • Detailed queries with visual representations of purchase order commitments. • Capability to receive items directly into inventory, jobs, and sales orders. • Two-stage receipt process for items that require inspection. • Distribution of non-merchandise costs across all purchase order receipt lines. • Goods Received Notes (GRN) system for matching supplier invoices to orders and reporting discrepancies. • XML export feature for easy electronic uploads by suppliers. • Management of policies and processes related to sourcing goods and services throughout the purchasing cycle. • Time savings and efficiency gains through bulk emailing of Purchase Orders. • Improved governance and transparency in the tender process using RFQs. • Quick and informed procurement decisions by comparing similar offers from different suppliers. • Automation of the procurement process enhances staff efficiency. • Helps control business spending and manage suppliers through comprehensive visibility of purchasing activities. • Inclusion of RFQs in SYSPRO’s Supply Chain Portal reduces manual tasks and fosters cross-functional collaboration in procurement. • Integration with the Return to Supplier (RTS) process ensures complete visibility of returns and enhances record-keeping and document management. • Support for multi-line purchase orders with the option to deliver to different warehouses and set different due dates for each order line. • Provision for order line comments and a notepad feature to capture notes for purchase requisitions and orders. • Multi-currency support with fixed or current exchange rates per order. • Collection of key vendor metrics to assess specific vendor performance. • Copy function for quick processing of repeat orders.

4 steps to a completely transperant procurement process with a fully accountable workflow for approval using digital stamps - you will never look back !!

Are your procurement processes outdated and inefficient? Discover the game-changing benefits of Dynamic Purchasing Systems