5 Crucial Tips to Improve Your Business' Procurement Performance

Your procurement processes can either be a major boost to your business, or a major financial drain. Procurement is a complicated and often messy process if you encounter an unexpected kink in your supply chain, or if you’ve got several departments to manage.

It’s well worth nailing down a good procurement procedure to ensure your business is running as smoothly as possible. A good and efficient procurement system often demands feedback and contributions from all the various departments. In fact, your organization should have a specific procurement department which sets out the direction for procurement.

Feel like your company’s procurement performance can improve but you’re not sure how to even start? Here are 5 important keys to improving your overall procurement performance:

5 Crucial Tips to Improve Your Business’ Procurement Performance

Tip 1:

Build solid relationships with good suppliers

When it comes down to it, a lot of procurement issues can be stopped before they happen with good relationships and communication. You want to research your suppliers as thoroughly as possible before entering into a contract with them. This helps to ensure you’re working with a reputable supplier that won’t have issues providing your supply later.

When you’ve found a reliable supplier, keep lines of communication as open as possible. A good way to implement this is by creating a singular system for requests, negotiations, and suggestions. Allowing your supplier to have a consistent means of communication means that should there be an issue, you’ll be ahead of the problem in fixing it earlier.

Encouraging input from your suppliers is another must do. This not only helps build a stronger relationship with them, but it also helps you get ahead of the game. Your suppliers see things from a different angle in the procurement process, so they also see other areas to increase efficiency.

Tip 2:

Research the expanding market

No matter what industry you’re in, your supply market is undoubtedly expanding. With our current increasing globalization more and more areas of opportunity are coming to light.

Research the supply market, as you should, but also look in areas you didn’t previously think to look. You may find a new supplier in an unanticipated region, with more reliable delivery and higher supply stock.

Make sure when you’re researching the supplier market that you also look to the future of your supplies. That means you’ll need to check future projections for supply availability or deficit. Like with the first tip, research your prospective supplier and make sure that the relationship itself is a good investment for your company too.

Tip 3:

Develop a solid risk assessment procedure

Risk assessment procedures are critical for any business, and it’s even more critical when it comes to your procurement procedures. Making a solid risk assessment plan involves more than emergency contingency plans. Putting a solid team or manager in charge of risk assessment takes some pressure off other departments and allows better productivity overall.

You have to assess alternate plans for situations that make result in a loss of supplies, a delay, or even the eventual reduction of supply availability. Creating a system for methodically dealing with cases of fall through and delay means less chaos when there’s an issue; basically, you’ll be able to reorganize and recoup losses faster than you would otherwise.

Tip 4

Get over the digital phobia

Procurement processes are one of the most reluctant industries to move to digitalizing parts of their workflow. While the fear surrounding digital security and poor investment can be understandable, the benefits far outweigh the risks. Just like any other business technology, there is an investment in training your teams and establishing solid cybersecurity.

Once the initial investment into going to e-procurement is made, however, procurement performance and efficiency are greatly improved.  Using an e-procurement platform or system ends up reducing redundancies and errors. Because documents and reports are made and stored digitally, processes can be looked at with more clarity, not to mention greater accessibility.

Thanks to technology, errors resulting in excess spending are also reduced (plus you won’t be spending even a fraction of what you do now on paper, ink, and document delivery costs).

A centralized digital procurement platform can also offer features that allow better communication through your suppliers and your procurement team. It also allows for departments to communicate their needs, and order from suppliers (and ensure that everyone gets their order).

When you digitize your procurement procedure, you also get to create a centralized system for ordering and purchasing. This not only helps track company finances more accurately, but it also allows you peace of mind: the easily lost orders and errors that result from manual procurement are now an issue of the past.

Tip 5:

Use standardized metrics to assess performance

Making procurement procedure performance improvements is a positive thing for any business. Knowing that the improvements are actually doing what they’re supposed to be even better. Using standardized, objective metrics is critical to actually knowing what works (using subjective criteria like opinions is not a reliable way of building data).

Establish a system of metrics, such as key performance indicators, or KPIs. You need to take time to evaluate the KPIs your company will begin using and your current baseline. These metrics will evolve and change over time with your business.

That’s why it’s important to note that the KPIs you measure will need to be evaluated periodically (ideally these reevaluations will happen on a set schedule at regular intervals, such as every six months or quarterly).

By establishing standard metrics to evaluate procurement performance, you will gain better analytical insights. In turn, this will allow you to increase productive procedures and modify unproductive procedures.


Creating systems and procedures that allow your company to optimize its procurement procedures can have a hugely positive impact. Not only does your company (and all the departments within) benefit from increased efficiency, but you also position your company for a better profit margin.

Using these 5 critical tips will help your company grow into the fast-paced future of procurement reliant industries.

Melissa StanleyBusiness
Your procurement processes can either be a major boost to your business, or a major financial drain. Procurement is a complicated and often messy process if you encounter an unexpected kink in your supply chain, or if you’ve got several departments to manage. It’s well worth nailing down a good...