Procurement process audit from DELOVOY PROFIL Group: increasing manageability and reducing risks
October 12th, 2021
«Procurement is one of the most capacious areas of activity of a company. The more organization acquires, the more significance of controlled procurement process increases, - Alexandra Shnipova, Deputy head of Management consulting practice, notes. «Insufficient attention to it and poorly regulated procedures can lead to enormous loss of profit and threaten the financial security of a company».
Audit of the procurement system is a necessary measure to ensure the stable functioning of the company. Particularly, it consists of the following parts:
Audit of the procurement system is a necessary measure to ensure the stable functioning of the company. Particularly, it consists of the following parts:
- audit of the suppliers’ selection process and preparation of recommendations for its modification;
- development of the supplier selection process regulations, including the tools and processes for their evaluation and selection;
- Inventory and detection of the negative schemes, which have an impact on the financial result and costs of incoming materials and products.
- your organization has an established pool of suppliers without rotation or an extremely narrow pool of suppliers (except situations, when rare materials or services are purchased);
- suppliers charge inadequately low prices or, on the contrary, significantly high
- prices compared to the market average, or you have no up-to-date information;— the final decision on suppliers’ selection is made by one person or by a group of people, which are not directly controlled by top management;
- you find out about the chosen supplier after the project has started;
- you do not see any objective reason for choosing a particular supplier;
- the task of suppliers’ and contractors’ selection in your company entirely lies with the owner or top management;
- the apparent objectivity of the selection procedure.
- A well-functioning managed business process that ensures transparency of controls with detailed instructions to staff;
- A clear procedure for tendering and the suppliers’ selection process with criteria that ensures the most efficient and safe selection process;
- Minimization of financial and fraud risks in the procurement process.
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