Procurement has evolved beyond simple purchasing; it’s become a strategic function that can make or break your company’s success.
B2B companies get this, especially those dealing with packaging procurement. Adequate procurement practices don’t just save money but also streamline operations, strengthen vendor relationships, and minimize risks while bringing transparency.
Understanding how procurement actually works helps businesses plan smarter and sidestep costly mistakes. Below are the seven stages that form the backbone of effective procurement.
The 7 Stages of the Packaging Procurement Process
Finding packaging for your products is not an easy process. The seven stages of packaging procurement provide a basis for businesses to find reliable suppliers, obtain and negotiate a better deal, and forge good relationships with the suppliers.
Small and large businesses benefit from following these established ways to ensure adequate packaging material is delivered at the best price.
1. Identifying Business Needs
Everything starts with a fundamental question: “What exactly do we need?”. The first step is understanding what packaging your business needs. Analyze your products, how they are shipped, and your brand objectives. Set a reasonable budget that fits your overall expenditure. Work with various departments involved in the process, obtain information on technical specifications, quantities, and timing. These points will help to avoid potential costly mistakes.
2. Create and Submit Purchase Requests
Put your needs into formal purchase requests. Draft a detailed purchase request clearly describing your packaging needs. Include specifications, quantity, delivery dates, and quality standards. Submit for approval through your company’s processes. If a request is rejected, reflect on it so you can learn for next time and make changes accordingly.
3. Evaluate and Select Suppliers
Find the right packaging partners. Look up potential suppliers that can fulfil your needs. Consider more than just price; compatibility with communication style, company values, reliance, and production load. Some businesses keep lists of pre-approved suppliers, while others start fresh for new requirements. Depending on your needs, you must decide on sourcing for a long-term demand or tactical buying for simple, short-term demands.
4. Negotiate Contract Terms
Work out the details that matter. After identifying your preferred supplier, negotiate prices, delivery times, and the quality you expect. Also, discuss the possibility of orders not arriving on time or not meeting quality standards. Look at your past contracts for additional options for improvement. This stage is the foundation for everything that follows, so spend adequate time on it.
5. Finalize Purchase Orders
Lock in the specific details. Create purchase orders that detail exactly what you’re buying (total cost, detailed description, advertised quantity, date of delivery, method of payment, contact information). These documents support your main contract that governs individual purchases. Check everything is accurate before you sign off.
6. Implement the Contract
Get your new supplier up and running. Help your chosen supplier integrate smoothly into your operations. Communicate the new arrangement to your team and explain any process changes. Align your new supplier with your company’s systems and quality requirements. Explore the need for digital tools to facilitate ordering and communications.
7. Manage Supplier Performance
Keep the relationship strong and productive. Continuously assess how effectively your supplier delivers on their service and product offerings. Monitor delivery performance, evaluate product quality, track communication, and overall performance. Regularly schedule review meetings, deal with issues, and discuss their development as a supplier. Clear expectations, measurable goals, and regular review meetings can establish good supplier management and develop long-lasting business relationships.
What are the Most Common Packaging Procurement Mistakes?
Even experienced buyers can fall into traps that waste money and create problems. Learning from other people’s mistakes can help you avoid errors and simplify the packaging procurement process. Knowing about these pitfalls will improve your procurement business processes to procure better packaging and allow you to manage the stages of the procurement process.
- Choosing Based on Price Only
Many businesses are focused on the price; they choose the supplier that gives the lowest price without examining quality or reliability. This often backfires when your low-priced packaging gets damaged during shipment, causes delays in fulfilling orders, or ruins your brand’s reputation. Poor quality packaging can amount to much more than you thought you saved.
- Skipping Sample Testing
Buying large quantities of something is risky before you have a sample. What looks good on paper might not actually protect your products or may not fit into the production line. You should always ask for samples and test them with your product before ordering a quantity.
- Ignoring Minimum Order Requirements
Suppliers often have minimum order requirements that are significantly higher than you may think. Not checking minimum requirements early on can disturb your budget or force you to order more than you need. Ask about minimums early on, and factor them into your planning!
- Poor Communication Planning
Vague descriptions and timing lead to results that may disappoint. Suppliers cannot read your mind, so you need to benchmark an exact description, delivery time frame, and quality criteria. Regular check-ins will help prevent small mishaps from becoming bigger tragedies.
To Conclude!
The seven stages of procurement process provide a direct way to understand your needs and build effective supplier relationships. Following the process carefully at each stage will help businesses make considered buying decisions, avoid pitfalls, and receive added value from their suppliers. It takes time and attention to complete each stage, and it’s worth it – in the end, you will get lower prices, higher quality, and less hassle.
A successful procurement is not about taking shortcuts – it’s about making sure you do a thorough job in each step to get results in the long term.
