Your procurement policies and procedures are critical documents. They establish your core policies and standards and define the procedures staff need to follow – consistently – to ensure effective and compliant procurement practices.
I sometimes find that the two terms are 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.
Your procurement policy outlines the overarching principles and standards used to set direction and influence decisions. It guides employee decision-making under a given set of circumstances within the framework of objectives and goals established 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.
Your procurement procedures define the ‘how’ of implementing your policies. They spell out the series of steps employees will follow, 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:
- Create clear requirements in a statement of work for the product or service you are procuring
- Develop and approve the Request for Proposal (RFP) following RFP standards to get great proposals and reduce risk
- Create scoring workbook to support proposal evaluation
- Identify prospective vendors
- Distribute RFP to prospective vendors
- Respond to vendor questions
- Receive, evaluate and score proposals
- Down-select vendors and conduct interviews/demos
- Perform a pre-contract risk assessment and due diligence on the finalist
- Negotiate and award the 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
Documenting your policies and procedures in a way that they reflect all the things you need to cover, but also are written to be usable by the employees who must follow them, is part art and part science. 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.
Author: Tom Rogers
Job Title: CEO
Organization: Vendor Centric