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7 best practices for successful procurement management

By Laure Fournier

Published: 7 May 2025

Procurement is a term used to describe the management of purchasing in the broadest sense of the term. Whether centralised or not, the process of obtaining supplies from suppliers plays a strategic role in a company's operations, as well as its financial performance. That's why it's essential to know the right methods to use on a day-to-day basis to manage procurement as effectively as possible.

What is procurement?

Procurement is the process of buying products or services from suppliers. There are several key stages in the process:

  • Drawing up specifications, particularly for complex purchases with elaborate technical specifications.
  • Sourcing to identify and list service providers who can offer the product or service required.
  • Putting suppliers in competition to obtain bids.
  • Closing : choosing the merchant, negotiating, validating internally and signing the contract.

In the public sector, competitive tendering may be carried out via a public procurement procedure, particularly when the total value of the contract exceeds a certain amount. In the private sector, most purchases are made by mutual agreement, simply by signing an estimate.

For some years now, you have been hearing more and more about e-procurement. This term refers to the evolution of procurement towards online services to manage the entire purchasing process.

The central role of corporate procurement

When you assess the risks to which a company is exposed, you don't necessarily think first of procurement. Yet the supply chain is entirely dependent on its suppliers.

If raw materials are not available from manufacturers, you can no longer produce. If prices rise sharply, you are forced to reduce your margins, at least temporarily, until you can increase your prices or improve your productivity.

You will no doubt have noticed this during the health crisis in 2021. Tensions on supply sources have an almost immediate impact on the availability of end products, but also on their price. That's why it' s so important to secure relationships with suppliers, so that you remain a priority customer, even in times of crisis.

How can you optimise purchasing management?

1 - Make your purchasing management paperless

When it comes to e-procurement, the first best practice is to go paperless. In many companies, the employee who needs a product fills in an order form on a sheet of paper, which is then signed by a number of managers before being sent to the supplier.

It's all very time-consuming. This leads to problematic delays in the supply chain. Sometimes requests get lost along the way.

To meet these challenges, Mon Intranet has developed a Procure to Pay software module that dematerialises the end-to-end purchasing management process:

  • Employees complete and submit their electronic purchase orders online.
  • Managers validate the request.
  • The validated purchase order is sent electronically to the subcontractor.
  • The employee acknowledges receipt of the products and generates a payment request, which is validated by the person responsible for paying the suppliers' invoices.

With an online solution like this, paper purchase orders are a thing of the past. The time saved in preparing orders and then validating them is considerable. As a result, you can reduce the supply lead times that can affect the smooth running of your operations.

Another important point is that such software enables you to centralise supplier information in a database. This makes it easier to manage sourcing.

2 - Centralise supplier information

By using a centralised database for all the company's suppliers, you will become more efficient in terms of sourcing, but also in the negotiation phase. Let's take the example of a large company with several industrial sites. If each purchasing department places its orders independently, it must :

  • Search for and list suppliers for each product in the catalogue.
  • Negotiate pricing conditions individually.

By using a common platform, the procurement process is faster. You have access to information on each supplier listed in the company and the volume of business already done. This gives you effective leverage for the negotiation phase. This is one of the essential components of an e-procurement solution.

3 - Assess the risks

Choosing a service provider involves risk management. There are many such risks:

  • Compliance risk: if the product does not meet certain standards, particularly when it is manufactured on other continents where standards are different.

  • Price fluctuation risk: the price of certain raw materials can vary considerably depending on various criteria. If your supplier is a wholesaler or distributor, they will be more directly exposed to these fluctuations and will have to pass them on to you more quickly.

  • Supply tensions: what is the production volume of your raw materials producer? Where is it located? Is this a strategic activity for them? Does your contract represent a significant proportion of its turnover? All these questions are essential to assess and anticipate any potential difficulties in delivering the expected products.

  • Quality problems: the specifications enable you to define the level of quality expected for each product delivery. Acceptable deviations must be specified precisely. An audit of the manufacturer's facilities provides a useful insight into working methods and the level of quality you can expect.

To limit the risks, it is always preferable to reference at least two suppliers for the same requirement. This not only maintains competition, but also ensures that you have a back-up solution if your historical supplier runs into difficulties.

Securing your supplier relationship with a contract will help you to find rapid solutions to any problems that may arise. Contracts establish a legal framework. Not everything should be contractualised, as this would make the purchasing process too complex. But it is good procurement practice to draw up a contract, going beyond the general purchasing conditions, as soon as you exceed a certain amount or there is a new specificity.

Once again, it's a question of balance. We mustn't fall into the trap of complexity that we find in the awarding of certain contracts. This could discourage some suppliers.

What's more, the administrative complexity of contracting is always reflected in the bill paid by the customer. Besides, a contract doesn't settle everything. The important thing is also the relationship of trust that you can establish with your contact.

4 - Check each purchase properly

When an employee places an order, they are incurring an expense. Is this expenditure justified? Is the amount appropriate? Management must monitor each purchase to ensure that it is in line with operational priorities and budgetary objectives.

This control must be proportionate. There is no point in having a purchase request for €50 approved by 5 lines of management. On the other hand, when a strategic capital expenditure is involved that will commit the company for several years, then tighter control is fully justified. The approval process therefore needs to be adapted to the company's policy. It must remain efficient and not lead to excessive delays throughout the supply chain.

5 - Buy when it's necessary and optimal

Expenditure has an impact on the company's cash flow. Each order received means that in the weeks that follow there is a cash outflow to pay the supplier's invoice. If the products ordered are not used quickly, cash is used for stock that does not produce any added value for the company.

Management of the production schedule must enable us to anticipate supplies as accurately as possible. The price of raw materials fluctuates over time, depending on the economic climate and the season. As a result, the purchasing department has to find the right balance between a target price and optimum stock levels. The priority is always to ensure uninterrupted supply to the supply chain. After all, when production comes to a standstill due to a lack of raw materials, the fixed costs remain and weigh heavily on the company's balance sheet.

6 - Avoid budgetary slippage

Each year, the company defines an expenditure budget for the various departments. Centralising purchases facilitates the work of the accounts department, which can then monitor the evolution of expenditure against the budget, according to how it is allocated. Any uncontrolled increase in expenditure is then quickly identified. Of course, this is only possible with the implementation of appropriate tools.

The profitability of a company's business or even a simple project is intimately linked to adherence to the budget. It serves as the basis for calculating costs and setting prices for finished products. This is why the procurement process must be directly linked to the budget.

7 - Understand the overall value of the subcontractor

The added value of a raw materials manufacturer cannot be reduced to the price of its products. On the contrary, you need to take into account :

  • Delivery times, particularly for unplanned requirements.
  • Payment terms.
  • The range of products available.
  • The quality of the products delivered: quality defects and delivery problems entail risks and costs for the supply chain.
  • The stability of the contractual and financial relationship: predictable and reasonable price trends, balanced sales policy.

All these factors must be taken into account when making your selection. Price always includes a certain level of service. It is the quality of this service that you need to analyse to see if it meets your needs.

There are many factors involved in optimising the procurement process. Mastering them requires the right tools and the involvement of everyone in the organisation who makes purchases.

Article translated from French