How To Improve Your Procurement Processes Within A Day
Procurement processes are essential for all organisation, especially those involved in manufacturing and logistics. However, they are often overlooked by non-profit organisations (NGOs).
Unlike corporate companies, NGOs do not prioritize profitability as one of the key indicators of success. Hence, these companies tend to care less about their profit and losses (P&L) and as a result, their spend.
Looking deeper, we believe NGOs focus on the ability to create the largest impact on the largest number of individuals. Proper fund management and resource allocation can go a long way in allowing NGOs to enhance their primary objective without being bogged down too much unrelated work.
Here are some of the easy-to-implement improvements that can help NGOs achieve more:
1. Supplier management
It is likely that your company has multiple suppliers to work with. That means you need to keep track of contract details, prices and payment agreements, contact details and many others.
Having a central repository of supplier data simplifies the process of managing multiple relationships. This increases efficiency and reduce time wastage on supplier management.
Without one, this information can get lost easily, especially if there is high personnel turnover or part-timers and volunteers dealing with vendors.
How to improve:
Create a shared folder with common access for multiple users (Intranet, Google Sheets, Dropbox or similar) with all the supplier details mentioned above.
High possibility of creating conflicted versions. Also, there won’t be updates on purchase information (inventory list, amounts, renewals). Nevertheless, a central repository is still much better than limited visibility or no visibility at all.
Implement a supplier relation management (SRM) system that enables efficient communication with suppliers, easy supplier performance management and a full audit trail.
2. Contract management
Many companies still utilise paper versions of contracts that are managed manually and usually stored in file cabinets. This practice is becoming obsolete as it decreases the overall organisational efficiency and makes it difficult to track contract executions and react quickly to changes.
Centralised contract management allows employees to access the contract information from anywhere in the world without delays and interruptions.
How to improve:
Create a shared folder with common access for multiple users (Intranet, GoogleSheets, Dropbox or similar) with the softcopies of all contracts and another folder to track current contracts (utilising information as start and end date, payment terms, etc to sort)
You can also use ThunderQuote’s free Contract Management Template to manage your contracts.
Contract management system or SRM system with the ability to manage the contracts. The system will enable employees to track the execution of the contract, analyse the spend, and automatically send reminders for renewals, deadlines, overdues, etc.
Most department level sourcing is done through the internet, personal acquaintances or word of mouth. To upkeep compliance, most NGOs need to source for at least 3 suppliers for comparison.
This is a labour-intensive process as different means of communication are used to contact and track the vendors.
E-sourcing has the benefit of price reduction through maximising competition among vendors. There is also higher productivity as communication is done via single portal and high compliance standards are maintained as all requests and quotes are public
How to improve:
Publishing the request in media (newspapers) or on the organisation’s web-site. It will be publicly accessible for vendors but will not have the benefits of centralisation and a broad outreach.
Using an online platform for tenders and requests like ServisHero for smaller requests and ThunderQuote or SAP Ariba for larger projects or contracts.
The improvements listed above are based on fundamental procurement benefits that NGOs shouldn’t ignore:
1. Staying compliant
Everyone who has worked in the public sector or a non-profit organisation knows how much time and effort it takes to ensure full transparency and high standards of compliance. Procurement automation allows for full traceability of transactions and decisions to internal and external auditors, allowing an elevated level of compliance.
2. Reducing workload
Every employee in an NGO is worth his/her worth its weight in gold, and it is crucial to allocate human capital to achieve the maximum impact.
It is thus senseless for employees to be bogged down with repetitive tasks like invoicing, purchase order generation, report generation, etc, which can be done automatically. Free up employees from these tasks will allow them to utilise their time more strategically impactful tasks.
3. Gaining control
Procurement software allows for greater visibility into current processes and allow inefficiencies to be detected as soon as they arise. As a result, it is easier to react to problems quickly either according to SOP or with a new set of actions.