When it comes to procurement, I often hear the words: “Why all this red tape when we want to procure goods/services”; OR “We need this urgently, can’t we use petty cash or the company credit card “.
Hence, I thought it appropriate to write about some fundamental principles regarding the importance of a robust procurement policy.
As we continue to grow and evolve as a training company, it’s crucial that we pay close attention to this. Let’s take a moment to explore why.
- Selecting the best Supplier/Business Partner
To start of the process, we need to be sure we select the best Supplier/Business Partner to supply us with the goods/services. These suppliers are maintained on an approved supplier list.
When the need arises to procure goods/services from a partner that does not form part of our current approved list of suppliers, the following criteria needs to be considered before adding to that list:
- 2 – 3 Quote principle: Always get 2 to 3 quotes from different suppliers. This enables you to compare prices and different offerings.
- Reputation & Quality: Does the supplier have a good reputation in the market and a track record of quality products/services and an after-sales support structure.
- B-BBEE scorecard: Always consider the supplier’s B-BBEE scorecard/certificate. Procurement plays a pivotal role in our overall B-BBEE scorecard and needs to be considered when selecting a new supplier.
To help us with the above, we make use of an online onboarding platform to give us the ability to manage, control and secure the full lifecycle of a payee.
- Getting approval
Probably the most important element to the procurement process is a company culture of “Approval before engagement with suppliers”.
As a company, our buyers/purchase requesters need to obtain approval from their relevant line manager before kick starting the purchase process with the supplier. This is done via our purchase requisition form from where we can create an approved purchase order to send through to the supplier.
The above seems obvious, however due to time pressure and multiple training programmes running simultaneously, we can easily fall into the trap of engaging with a supplier before approval to get the process started earlier. This creates the risk of legally binding us to service provider without oversight from management.
- Cost Efficiency
A well-designed procurement policy helps us optimise our spending and ensure that every Rand is wisely allocated. It also helps to identify cost-saving opportunities, negotiate better deals with suppliers, and avoid unnecessary expenses. This not only contributes to our bottom line but also allows us to invest more resources into enhancing the quality of our training programs and services.
- Risk Mitigation
In today’s business environment, risks are ever-present. From supplier reliability issues to compliance concerns, there are numerous factors that can disrupt our operations if not properly managed. As mentioned under point # 1, to help us mitigate these risks, we need stringent evaluation criteria for suppliers, ensuring compliance with relevant regulations, and fostering transparency and accountability throughout the procurement process. This will help safeguard our business continuity and reputation.
- Quality Assurance
As I mentioned in my February article, 2024 is dubbed the “year of the client”. Delivering exceptional training experiences to our clients is at the core of what we do.
Our procurement policy plays a critical role in maintaining the quality and consistency of the resources and materials we utilise in our programs. By establishing standards for product and service specifications, conducting thorough vendor assessments, and monitoring performance metrics, we can uphold the high standards that our clients expect from us. This not only enhances customer satisfaction but also strengthens our competitive advantage in the market
- Sustainability and Social Responsibility
As a responsible corporate citizen, we have a duty to consider the broader impact of our procurement practices on society and the environment. Whether it’s supporting local businesses and communities, or reducing waste generation, we can align our procurement decisions with our values and contribute to building a more sustainable future.
In conclusion, a good procurement policy is not just a tick box exercise or adding unnecessary red tape to our decision-making process. It’s a vital strategy to ensure our Company’s effectiveness and sustainability. By adhering to our procurement policy and embracing a culture of continuous improvement, we can optimise our resource utilisation and uphold our commitment to responsible business practices.
Thank you, and here’s to the shared quest of our continued success as a leading training company.
