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Develop a Procurement Strategy for Your Tendering Department

  • Post published:January 25, 2025
  • Post category:eProcurement
  • Reading time:7 mins read

Developing a procurement strategy that aligns procurement with broader business goals takes the procurement department from a cost centre to value drivers. As the main control of purchases and spend management, procurement is poised to be an excellent partner in aiding the company drive up value and optimise cost.

Without a well-thought-out approach, organisations risk inefficiencies, increased costs, and non-compliance. In this article, we share the steps to creating a procurement strategy tailored for your tendering department, breaking down each phase to ensure that your team maximises opportunities and mitigates risks.

What Is a Procurement Strategy?

A procurement strategy is a long-term plan designed to manage an organisation’s acquisition of goods and services. It serves as a roadmap to align procurement activities with your company’s goals, ensuring the business acquires the best value while minimising risks and maintaining compliance. In the tendering department, a procurement strategy defines how tenders will be managed, evaluated, and awarded to secure the best suppliers.

A strong procurement strategy considers the following:

  • Cost savings: Ensuring adequate supplier selection to minimise expenses.
  • Value Optimisation: Optimising cost and driving up value.
  • Risk management: Identifying and mitigating risks tied to supplier performance and market volatility.
  • Compliance: Ensuring all procurement activities adhere to legal and internal guidelines.
  • Efficiency: Streamlining processes to reduce delays and manual workloads.
  • Supplier relationships: Building long-term partnerships that drive innovation and value.

Key Steps to Developing a Procurement Strategy

Here we share a step-by-step approach to building an effective procurement strategy for your tendering department. Each stage helps to create a framework that enhances the procurement process and strengthens overall operations.

1. Analyse the Current Procurement Environment

Start by understanding your department’s existing procurement practices. This involves assessing how current tenders are handled, reviewing supplier performance, and identifying bottlenecks or inefficiencies.

Key areas to examine include:

  • Supplier performance: Review supplier performance data to evaluate which suppliers consistently meet their obligations.
  • Cost analysis: Identify opportunities to reduce costs through better sourcing or negotiation practices such as bulk purchasing.
  • Risk factors: Recognise potential risks associated with current suppliers or market conditions.

By auditing your current procurement landscape, you gain insight into what currently works well for your company, and where improvements can be made. This forms the basis for your procurement strategy.

2. Define Business Objectives and Procurement Goals

Procurement goals should align with the broader objectives of the organisation. For a tendering department, this might include reducing procurement cycle times, enhancing supplier diversity, or achieving cost savings targets.
Define these goals clearly, and prioritise them based on the company’s needs. For example, if your organisation is focused on sustainability, include tender criteria that prioritise eco-friendly suppliers.

Key considerations in this stage:

  • Cost savings targets: How much does your department aim to save annually?
  • Value optimisation: What requirement does your company value in suppliers?
  • Compliance needs: What are the critical legal or industry-specific regulations to follow?
  • Company innovation: Are there goals related to fostering innovation through supplier partnerships?

Defining these objectives will set clear expectations for your procurement team and ensure that everyone is aligned.

3. Establish a Supplier Selection Framework

Selecting the right suppliers is a cornerstone of any successful procurement strategy. For the tendering department, having a clear supplier selection framework ensures transparency and consistency across the board.

This step involves:

  • Creating evaluation criteria: What are the essential qualifications for a supplier? Price, quality, experience, and compliance are common factors.
  • Using weighted scoring: Assign scores to suppliers based on predefined criteria, ensuring a structured approach to evaluation.
  • Encouraging competition: Regularly put contracts out to tender to prevent complacency and encourage competitive pricing.

This framework ensures that tenders are awarded to suppliers who offer the best value, while also adhering to business goals and compliance standards.

4. Develop Procurement Policies and Procedures

Creating standardised procurement policies will streamline the tendering process and eliminate ambiguity. Ensure your team is equipped with clear guidelines for every phase of the tendering process.

These policies should cover:

  • Tender preparation: How should RFPs (Requests for Proposals) or RFQs (Requests for Quotes) be drafted?
  • Sourcing: How should suppliers be sourced? What are the guidelines to ensure fairness and transparency?
  • Evaluation protocols: What are the steps for evaluating bids fairly and objectively?
  • Contract management: How will contracts be managed once awarded to suppliers?

Having well-documented procedures simplifies procurement operations and ensures consistency. It also helps mitigate risks, as every step is guided by formal policies.

5. Implement E-Procurement Systems

Technology plays a pivotal role in modern procurement strategies. Implementing an e-procurement system in your tendering department can automate and enhance many aspects of the procurement process.

Key benefits include:

  • Automation: Streamlined sourcing and procurement processes, automated bid evaluation, and contract management reduce manual workloads.
  • Compliance: Digital forms and automated workflows guide staff through procurement policies, ensuring compliance is met for every purchase.
  • Transparency: Digital platforms provide clear records of all procurement activities, promoting accountability.
  • Data analytics: Leverage data insights to optimise supplier performance and improve procurement decision-making.

Many organisations, including government bodies, are now using e-procurement systems like TenderBoard to manage tenders more efficiently, reduce errors, and maintain compliance with procurement laws. By integrating such systems into your procurement strategy, your team can focus on strategic tasks rather than administrative burdens.

6. Build Strong Supplier Relationships

Especially for strategic suppliers, your procurement strategy should not only be about selecting the cheapest suppliers. Instead, focus on building long-term relationships with suppliers who continually bring value to the business.

Foster strong connections with suppliers by:

  • Ensuring transparency: Maintain open lines of communication with suppliers about performance expectations.
  • Providing feedback: Regular performance reviews help suppliers improve and stay aligned with your business objectives.
  • Encouraging collaboration: Invite suppliers to participate in joint problem-solving or innovation sessions.

A collaborative relationship with suppliers promotes better results in the long run and can lead to innovation that benefit both parties.

7. Monitor and Optimise the Strategy Continuously

Your procurement strategy should not be static. It requires continuous monitoring and refinement to stay effective.

Regularly review procurement performance metrics, such as:

  • Cost savings: Is the strategy delivering the desired financial impact?
  • Value driver: Has this strategy improve value? (Value, in this case, needs to be defined first)
  • Supplier performance: Are suppliers meeting their commitments?
  • Process efficiency: Have procurement cycle times improved?

Regular reviews allow you to adjust procurement strategy as issues arise or if business objectives shift. Flexibility and adaptability in the procurement department helps to keep the strategy relevant and effective.

Conclusion

Developing a procurement strategy for tendering department involves a structured approach that begins with a clear understanding of the current landscape and ends with continuous optimisation.

By aligning procurement activities with business goals, establishing a transparent supplier selection framework, and leveraging technology, procurement departments can deliver better value, mitigate risks, and improve operational efficiency.

A successful procurement strategy is one that evolves, adapts to new challenges, and ensures the tendering process remains a key driver of organisational success.