A procurement plan -- also called a procurement management plan -- is a document that is used to manage the process of finding and selecting a vendor. The plan justifies the need for an external supplier and explains how the process of finding a supplier will be performed -- from identifying the project requirements to closing the contract. Show
The goal of a procurement plan is to increase the efficiency, effectiveness and transparency of the procurement process. The document specifically describes how products or services will be acquired and how vendors will be managed during the project. It includes information such as the types of contracts that will be used, the planned delivery or implementation dates for the contracted products or services, the types of metrics that will be used to evaluate the vendor's performance and an explanation of how the procurement process will be performed. Creating a procurement plan helps an organization avoid surprises and last-minute considerations. The document helps leaders decide what to buy, when to buy it and what sources to purchase from. A procurement plan also allows project planners to determine if their expectations and requirements are realistic and can be completed in the proposed project timeline. Many organizations use procurement software to automate and accelerate the procurement processes and optimize their workflow. What is included in a procurement plan?Procurement plans can be created for specific technical requirements and projects or for multiple requirements related to different systems. While the details will vary, successful procurement plans will include the following components:
How to write a procurement planFollow these steps to create an effective procurement plan: Explain the procurement process. This section of the procurement plan provides an overview of the steps that must be taken to acquire products or services from a supplier, as well as an explanation of what must be done to manage the process. Identify roles and responsibilities. This section of the procurement plan identifies the different people working on the project and all stakeholders who will be affected by the project. The different roles involved in the procurement process include:
Identify the procurement needs and requirements. The first section of the procurement plan describes the products or services the organization is looking to acquire and offers an explanation and justification for why the products or services must be bought from an external supplier instead of internally sourced. Define the project timeline. This section proposes a timeline for the project and describes the timeframe in which the products or services are needed. Including this section helps project teams better understand when the procurement process should be started and when it needs to be completed by. Define change approval processes. This section describes the organization's change management processes -- specifically, how changes can be made to the procurement process and documentation. The section includes an explanation of how to ensure the changes are necessary, understood and approved by all appropriate people. Identify vendor management techniques. This section of the procurement plan explains the techniques that will be used to manage vendors once they have signed the contract. The goal of this section is to ensure vendors fulfill their side of the deal and provide the organization with the products or services they've requested at the quality they expect. Vendor management techniques include:
Define relevant legal jurisdiction. All legal requirements for the project should be identified to ensure the company and vendor comply with the laws. For example, companies need to consider if they are affected by legislation such as the California Consumer Privacy Act (CCPA) or General Data Protection Regulation (GDPR) and whether the product or service they are considering offers regulatory compliance with the relevant laws. The legal requirements should also be clearly identified to ensure all stakeholders are aware of them and do not violate the legislation. Identify payment methods. This section identifies the different payment methods and currencies that will be used and accepted during the procurement process. If payments are to be made periodically -- such as monthly or annually -- then the terms for these payments must be detailed to ensure there is no conflict between the organization and vendor regarding how much money is owed. Explain risk management processes. Working with an external supplier introduces new risks to a project that would not be relevant if the project was internally sourced. This section of the procurement plan details the risk profile of the project, including:
The statement of work is an essential element of an organization's risk management processes. The SOW defines the necessary project activities, deliverables and timelines that the vendor must follow to fulfill their half of the deal. Providing vendors with a SOW reduces risk by ensuring the supplier knows exactly what is expected of them and when it is expected by. Identify project constraints and limitations. This section of the procurement plan explains all the constraints and limitations that the project team and vendor must deal with. This can include:
Benefits of procurement planningProcurement plans provide many benefits to organizations that are looking to acquire new products or services from external suppliers. Most notable is the document's help with the management of the procurement process. Other benefits include:
Procurement softwareProcurement software is a computer program or suite that automates the purchasing and inventory recording processes. Using procurement software, organizations can create purchase orders, pay bills, execute online ordering processes and match invoices to the materials that have been received. Procurement software is grouped into four major categories:
Some of the top P2P software options include:
Tradeshift, SAP Ariba, BuyerQuest and Coupa Software are also among the top purchasing software options. Other popular offerings include Certify by Emburse and ProcurementExpress.com. Popular RFP software options include:
Finally, some of the top spend analysis software options are:
This was last updated in May 2020 Continue Reading About procurement plan
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Who is responsible for procurement plan?2. Creating the Procurement Plan. Establishing a comprehensive procurement plan is an important role the Project Manager plays to define expectations and align stakeholders.
Which of these are among the contents of the procurement management plan?Components of Procurement Management Plan. Estimating.. Project scheduling.. Vendor control.. Pre-qualified Vendors.. Roles and responsibilities.. Risk management.. Legal jurisdiction.. Payments.. Which contract carries the least risk for suppliers?An FP-EPA contract carries the least risk for a supplier. What is one drawback of outsourcing? it can make an organization become overly dependent on particular suppliers. While outsourcing, organizations should protect strategic information because it can become vulnerable in the hands of suppliers.
In which contract does the buyer pay the supplier for allowable performance costs along with a predetermined percentage based on total costs?ANSWER: a With a cost plus percentage of costs (CPPC) contract, the buyer pays the supplier for allowable performance costs along with a predetermined percentage based on total costs. From the supplier's perspective, a CPPC contract carries the least risk.
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