How to create a procurement workflow for your business

Procurement managers are the in-house experts for vendor selection, negotiation, and management. Arguably, their most critical skill is the ability to quickly become experts on behalf of any business department that needs their help.

That’s because procurement staff are responsible for finding solutions to problems presented by any team — from sales and marketing to accounting and HR. One day, procurement may need to source rubber for the product development team. The next day, they might be searching for the best payroll software for the accounting department.

With a structured and consistent procurement workflow in place, managers are able to spend more time finding the best solution to the problem and less on managing the process.

The basics of a procurement workflow

A procurement workflow is the step-by-step checklist a company uses to purchase anything new.

For procurement managers, a new project starts when a coworker identifies a problem. For example, the VP of sales might be unhappy with the team’s existing customer relationship management (CRM) system. That person will come to the procurement team with a purchase request for a new CRM software subscription.

That request kicks off a procurement workflow, which involves researching, vetting, approving, and onboarding vendors.

Procurement workflow steps

Here’s a more detailed procurement process to follow. You can automate some of the steps with technology. We’ve included specific recommendations for how to do that in each step, but you can also take a look at these procurement process approval templates.

1. Purchase request. The procurement team receives a request from a colleague to solve a specific need (and purchase a solution). For example, the VP of sales requests a new CRM software tool for her department.

You can use this purchase request template to gather the right information through an online form and store it in one organized list.

2. Vendor selection. The procurement team creates a list of companies and solutions that could meet the needs in the request.

For example, ABC CRM is the best in our industry, XYZ CRM is the most popular across all industries, and 123 CRM potentially solves the biggest percentage of our team’s needs.

In this step, the procurement team negotiates terms and pricing, and will condense the list to final candidates. The department head (or budget owner) will give final approval on which vendor to choose.

Once the department head selects the vendor, you can gather the information required to add the vendor to your approved vendor list. Here are templates that can help you with this step: new vendor setup form or supplier registration form.

3. Purchase order. The procurement team asks the finance team to create an official request to buy the chosen product from the vendor.

For example, our company has decided to sign a contract with 123 CRM for one year at this rate per month.

You can customize and fill out the product order form to generate a product order.

4. Contract approval. The procurement team gets approval from all internal stakeholders before officially signing the terms.

For example, 123 CRM has delivered the contract stating the terms of the agreement.

If you’d like the vendor to sign a contract to work with you, choose from any of these contract templates.

5. Invoice and payment. The vendor sends the invoice and order details. This is the final chance to review and approve the invoice. It then moves to accounts payable, which will set up recurring payments.

For example, 123 CRM will deliver cloud software starting on this date, payment will be due on this day of the month, and the company will have access for one year with the right to extend monthly after that.

You can automatically ask for payment approval with this payment authorization form.

6. Vendor (or inventory) management. The vendor is now an approved, ongoing partner of the company. The procurement team will need to manage the associated contracts, invoices, terms, and contacts as well as record any inventory the vendor provides.

Here’s the vendor example: 123 CRM has moved to our approved vendor list.

This is the inventory example: We’ve added 123 CRM to our suite of SaaS tools.

Use these templates to integrate your new vendor into your company’s processes: new vendor setup form, supplier registration form, inspection forms, and receiving checklist form.

A procurement workflow tool

Jotform helps procurement managers deliver a consistent workflow time after time. Rather than dealing with emails, meetings, and spreadsheets, you can leverage online forms and workflows to manage the process. This frees you up to spend more time finding the right vendor.

To get started, build your procurement workflow the way you want using these templates.

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