1. Meet with the Managers/Staff
The first thing you’ll want to do before you set your goals & KPI's to improve the procurement department is to arrange a meeting with the key managers. Specifically the managers or staff of that department or other relevant departments, who make the decisions to place orders with suppliers.
You’ll want to discuss with them what they think the areas of improvement could be. Discuss the processes & KPI's that are occurring within the department already are they working or will you need to let go of some of them. Getting a manager’s perspective can help you understand what to set the new goals & KPI's on and also get the managers onboard with the improvements and agreed goals & KPI's.
2. Prioritize the Procurement Department
After hearing from the managers about the current KPI's and processes of the department. Start to prioritize the different processes & KPI's that will make the biggest impact on improving your bottom-line first. Each process will havedifferent challenges. Prioritizing them can ensure that you are getting to the bigger challenges first.
The procurement process will take you through the process of making a company purchase with specific suppliers. If you sense an issue with choosing the suppliers, you may want to start in that area first. If you feel as though the process is taking a wrong turn in the very beginning then you’ll want to go through each step again from the start.
This is where the meeting with the managers comes into play. And why it is a vital step to the improvements in the future.
3. Purchase Orders
Depending on where you’ll start your improvements you will eventually get to Purchase Orders (PO's) Forms or Supplier invoices, select a random group of these purchase forms to review and commence a price health check/ bench marking task against the suppliers that you use, and also to confirm the PO's are being completed correctly within your business.
This will mean checking that each section is filled out correctly. Make sure that the signatures on this purchase order are valid as well. Finally, check the information on the final invoice and any other documents that should have the same information.
4. Suppliers and Selection
Every company should have a process of putting Suppliers on an approved list. This is an area of the procurement process that is likely to have fraud. Review this process to ensure that it is up to date and meets the standards that the company requires. Set aside any orders that are made without this process for your later report.
Next, look at the Suppliers on the approved list and review them by the criteria required once again and also look at the option of consolidation. Set aside the suppliers that don’t meet the criteria, to review and make a final decision on next course of action,
5. Review Your Procurement Department Procedures
As an extra factor, you will also should review the overall procedures taken by the employees in procurement department. Whether these procedures are signature reviewing or purchase order approval by a manager and need to be updated or amended.
Review the steps that employees should be doing to ensure that the procurement process is done correctly. If there are steps being skipped or not done efficiently record them for your report to discuss and action later.
6. Sum Up Your findings
Finally, gather all of your findings/results and come up with some suggestions for how to improve them and reset the processes and KPI's. Then arrange to meet with the managers one more time to discuss your findings.
Highlight the processes that were done incorrectly or not done at all. This will help managers address them right away. Ask the managers for suggestions on how to improve or fix problems as well and agree the new procurement process and KPI's for the department.
7. Create a Report
Now you should create a report detailing your new procurement process and KPI's. This could then be sent to higher management or the executives of the company/business. In it, you will include everything you have found as well as how they will be improved in the future and how you are measuring the new procurement processes and KPI's against your new goals. Review the new procurement process and KPI's with the key management in the procurement department, at least every two weeks from the start, to ensure that they are engaged in the new goals and KPI's.
