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Procurement Policies & Procedures: Best Practices to Get them Right

 

 

We help a variety of organizations document and streamline their procurement policies and procedures.  In our work I find that the two terms are often used interchangeably; however, they mean very different things.  

 

Here is a quick primer on how procurement policies and procedures go hand-in-hand, and a few best practices to follow to get them right.

 

 

Procurement Policies

 

A procurement policy is an overarching principle used to set direction and influence decisions. It should be used to guide to decision making under a given set of circumstances within the framework of objectives, goals and management philosophies as determined by senior management.

 

One example would be a Competitive Bidding Policy that states any procurement over a certain dollar amount must be competitively bid through either a price quote or a request for proposal.

 

The policy is written as a guideline to follow, but is not prescriptive about how to go about performing a competitive bid.  That is where the procedure comes into play.

 

Procurement Procedures

 

A procurement procedure is a particular way accomplishing something that, in many cases, implements a policy.  It should be designed as a series of steps to be followed in a consistent and repetitive approach or cycle, with the goal of accomplishing an end result.

 

Using our example from above, a set of procedures would also be developed to implement the Competitive Bidding Policy.  If, for example, a buyer was procuring consulting services that were expected to exceed the dollar threshold requiring competitive bids, they might follow procedures like this:

 

  • Develop Request for Proposal (RFP) to include requirements, scope of work, timeline, contract structure, and other pertinent information

  • Have RFP approved by supervisor

  • Identify prospective vendors

  • Distribute RFP to prospective vendors

  • Answer questions on RFP

  • Receive, evaluate and score proposals

  • Perform a risk assessment on the winning vendor

  • Perform risk-based due diligence on the vendor

  • Negotiate and award contract

 

Also, in most cases, an organization would have forms, templates, checklists and other tools that would be used to support the consistent implementation of these procedures.  These might include an RFP template, a proposal evaluation scorecard and a contract checklist, for example.

 

Best Practices for Documenting Your Procurement Policies and Procedures

 

Here are some things to keep in mind when documenting your policies and procedures:

 

  • Use clear, concise and simple language that your staff can actually understand.

  • Create policy statements that specifically address the rule, and procedures that direct the implementation of activities.

  • Develop procedures that offer employees options, when feasible, as procedures that are unnecessarily restrictive may not prove useful.

  • Reference forms, templates, checklists and other tools that staff should use.

  • Identify roles and responsibilities to eliminate confusion.

  • Designated and identify persons who can help interpret policies and resolve problems.

  • Assign an owner to maintain and continually refresh your procurement policies, procedures and documents.

 

Writing procurement policies and procedures can be a time intensive task.  It requires gaining insights and feedback from your staff, integrating compliance requirements and best practices, and taking the time to write them in plain English so people can successfully understand and implement what's required.

 

Vendor Centric has developed a comprehensive library of procurement policies, procedures, forms and templates that can help you save a significant amount of time and effort.  

 

If you need a little help getting your procurement policies and procedures where you want them to be, contact us to schedule a free, no hassle consultation to explore your needs and see if we can help.

 

 

Tom is Founder & CEO of Vendor Centric. He writes and speaks frequently on the topics of procurement and vendor management. Connect with Tom on LinkedIn or drop him a note at trogers@vendorcentric.com.

 

 

 

 

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