What Is Procurement Planning ?

1 ANSWERS

1. Guest2945
   

   Procurement planning is the process used by companies or institutions to plan purchasing activity for a specific period of time. This is commonly completed during the budgeting process. Each year, departments are required to request budget for staff, expenses, and purchases. This is the first step in the procurement planning process.
   The budgets for all the departments are then reviewed, and in an organization that is committed to procurement planning, the accountants spend the time to find common purchasing requirements. Based on the budgets submitted, they may direct departments to work with central purchasing to combine their planned spending for specific commodities. This process works best in an organization that is committed to reducing costs. Issues surrounding delivery dates, contract compliance, and customer service issues must be resolved internally before going out to contract.
   
   Administrative overhead is the cost to the organization for the entire procurement to pay cycle. This includes the salaries and support costs for procurement staff, invoice processing, check production, and resolving of vendor inquiries. An organized, managed process eliminates a significant amount of these costs, as they are incurred only once for every commodity.

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