Rethinking Procurement Workflow: Are We Approaching It Backwards?
Effective procurement is vital to maintaining operational efficiency and ensuring organizational compliance. However, the sequence in which procurement activities are conducted can significantly impact the smoothness and clarity of the process. Recently, I’ve been examining how different organizations structure their procurement workflows and questioning whether our current approach might be inverted or suboptimal.
Typical Procurement Process in My Organization
Currently, our procurement process follows this sequence:
- Sourcing
- Intake
- Contact Execution
- Requisition
- Purchase Order (PO)
While this chain appears logical at first glance, I suspect that the last three steps—Contact Execution, Requisition, and PO—may be ordered differently, perhaps even in reverse.
How We Did It Historically
Reflecting on my previous role at a public institution, the approach was somewhat different. The process was:
- The business unit submitted a requisition upfront.
- We verified whether the requisition was backed by an existing contract. If not, we would initiate contract negotiations and formalize the agreement.
- Once the contract was in place, we issued a Purchase Order (PO) to formalize the purchase.
This sequence ensures that every requisition is supported by a solid contractual foundation before any financial commitments are made.
Contemporary Approach: A Different Sequence
In my current organization, the process begins with the business submitting an “Intake” that already includes a somewhat-negotiated contract. This intake then moves directly to execution, followed by creating a requisition based on the contract, and finally, generating a PO.
While this method can streamline certain activities, it appears to rely heavily on pre-negotiated contracts before even formalizing requisitions, which may introduce redundancies or reduce procedural clarity.
Is the Current Approach Flawed?
This leads me to question: are we essentially doing it backwards? Specifically:
- Requisition Redundancy: If a requisition is created after the contract has been almost finalized, does its purpose diminish? Or is it merely an administrative step duplicated elsewhere?
- Contracts First: Should contract negotiations precede requisitions altogether to prevent earlier commitments without contractual backing?
- Streamlining Processes: Would aligning our process closer to traditional or best-practice models improve transparency and compliance?
Open Invitation for Insights
Procurement workflows vary widely across industries, organizations, and even jurisdictions
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