Why you must have comprehensive procurement policy

In every organization, there are policies (written or unwritten) that guide decision making.

From multipage folders – sometimes automated to the thoughts and whims of the ‘Oga’, these policies are the guiding rails of activities of employees and departments within the company.

For those people who say that their organizations don’t have any, I will only ask you to observe patiently until you or someone else does something to disrupt operations; you will (very quickly) become aware of these policies!

Now, policies are guidelines for action set up by the government and non-government organizations that define the way they want to work.

Policies are like big signboards that say, “Lookout, this is how we want to do things!” They inform insiders and outsiders of what is allowed, and more importantly, what is not allowed within that sphere of operations. In fact, one of the reasons they say African businesses don’t outlive their founders is because of the absence of enduring business policies.

Procurement becomes even more critical, as for most companies, the procurement department is the major funnel through which money goes out. If the main avenue through which resources are expended doesn’t have strong guidelines, there is a risk that such an organization will not remain in business for very long.

I will now address two major benefits of having a good procurement policy in your organization

The first is Control – a comprehensive procurement policy gives you control of your operations and puts you in charge of your work. This means that you get to write your own manual.

A lot of work in procurement has to do with managing exceptions. You have a process for getting things done, but your boss or an important stakeholder wants it done a different way.

With a well-written policy, you can capture typical exceptions and how they should be handled, who requests for them, and who approves them.

Learning this early in my Procurement career completely changed the way I managed expectations. Don’t sit down frustrated and feel like a victim under the pressure of so many non-compliant requests, build those exceptions into your policy, and take control!

The second is Audits – Internal and External Auditors are the bane of procurement organizations. No matter how hard you’ve worked through the year, a poor audit report can make you feel completely helpless. These auditors can find snow in a desert!

They seem to target the only transactions you failed to regularize, and they end up making a big deal out of those. However, if you recognize that they are only doing their jobs and that audits will never go away, you can learn to embrace them, and work with them to improve your processes.

Use the feedback from the auditors to strengthen the weak areas of your policy documents and include a process for self-reporting violations. You must also note that an auditor will only evaluate your work based on the policy documents you have, and this further builds on my case for a well written, comprehensive policy document!

In future articles, I will break down the elements of a good procurement policy document, and how you can go about developing one for your organization.