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Five Advantages of Effective Procurement Planning

The initial stage of the procurement process is the creation of a procurement plan which establishes a timetable for the items to be purchased and when , based according to the budget for the department. It serves as a guideline the foundation for the procurement team to keep the team on track to meet deadlines and avoid overspending by any means. If it is done correctly there are numerous benefits to planning for procurement that include the time savings and savings on tools like fuel cards. Below, we’ve provided the top five benefits of planning for procurement to help you understand why you need a plan and how valuable it can be for your procurement department.

The benefits of procurement planning

1. Cost Reduction

One of the most admired benefits of planning procurement is the reduction in cost that can be derived through strategically sourcing items and deciding on which suppliers to source these items from as part of the plan for procurement. Utilizing the time of planning to discuss with suppliers and also having the benefit of not being confined to a strict deadline, it could mean that it’s much simpler to talk about price and possibly lower the cost of products. If you’re working with the time frame that is rapidly approaching, you’re on being put on the back foot. On the other hand, during the process of obtaining estimates, you’ll can benefit from making comparisons between prices with other suppliers and the market price with no stress hanging over your shoulders.

TIP: Always be in touch with other departments throughout the process of planning. Simple tasks such as asking them to complete an inventory-taking of office supplies can assist you in deciding how to spend your money and decrease projected costs more efficiently during the planning phase.

2. Extra Resourcing

Effective procurement planning ensures that you’re thinking about all aspects of what your department requires in order for the operation to be run efficiently. Certain projects or specific times might require additional resources when planning it in the beginning, you will be able to decide when the period will be appropriate and then consider it in your budget. For example, if , for instance, you work in the field of fleet procurement or the haulage business and you are aware that you’ll require additional vehicles in peak times and you know you could also need additional fuel cards for haulage drivers.

Knowing when your most popular times are and preparing to prepare for them, will give your fuel card company an idea of the profile you have for your fuel spending. An alert that you may need more cards will guarantee that they will be distributed and delivered on time , saving valuable cash and time.

3. Transparency

Since the plan is made for everyone to view and understand It creates full transparency in the procurement process. If, for any reason there be a problem the plan is a great base to review and come up with a solution. Additionally, should something happen to go wrong when a plan is that is in place, nothing else will be affected since a clearly defined procedure for the acquisition of everything is clearly laid out, and doesn’t have to create ripple effects all over the board.

Tips: Remember that the plan you’ve created isn’t written in stone. A certain amount of flexibility should be allowed for unexpected changes that may occur outside your control. While you’ve decided which suppliers you’ll use continuous market research should be conducted all through the year. Based on the results of this research, be ready to modify your plan to account for any changes to suppliers or price reductions that are bargained.

4. Planning Vs. Performance

While planning is the primary stage of procurement, one of the advantages of planning for procurement is that you can utilize it to track every step to assist in studying the performance of your organization. When using the plan as the basis to measure performance against you are able to easily pinpoint any reasons why you are not meeting your targets and then determine if changes are required to the plan in the future down the timeline. If you’re in management or in charge of the department, this can be an excellent tool to use to use during appraisals or providing any constructive feedback that you believe is needed.

TIP: Make sure that any modifications to your plan are recorded precisely, and include an explanation of the reasons of the change, along with the correct dates to correspond with the actions. Absolute accuracy is required for tracking performance data accurately so that you can reuse and reference this information.

5. Future Strategy Development

Effective procurement planning useful in assessing performance in real-time and analyzing, but it can be very useful in creating and perfecting a powerful procurement plan or model that can be reused and modified for many projects or plans in the future. After analyzing performance, further analysis could be done to determine what methods work and require further development which will allow the most effective strategy to be developed using real-world information about what has been successful.

TIP: When creating your strategy, make sure to be sure to reference the procurement plans of your predecessors when you can. There are likely to be patterns or methods which are in line or integrated with the current plan to improve the strategy.

The benefits of planning procurement impact the actions to come from the department, and the actions in the near and in the future. This makes planning an integral part of the process of procurement. Planning is only one piece of the equation to have a successful purchase. For more information on other aspects that have to be considered in order for successful procurement take a look at our entire guide.