Procurement Policy

To streamline the increasing numbers of related vendors and to encourage competition among vendors of related products, to encourage transparency and accountability for effective management in the company’s account, every company needs a procurement policy. Here we will give you a sample of what the procurement policy looks like. You can copy and use for your company.

 

Procurement Policy

Policy Objectives

• To streamline the increasing numbers of related vendors for effective management in the company’s books.
• To encourage competition among vendors of related products and thus obtain goods or services at the most economical price for best quality.
• To encourage transparency and accountability.
• To encourage bulk purchase from one or two vendors of related products thereby obtain volume discounts and generous prices.
• To concentrate the company’s debt portfolio in the hands of fewer vendors/contractors for effective management.

Policy Guidelines

1. All purchases shall be in accordance with approved procedures that will be issued out by the management from time to time.
2. All purchases must be made from the approved list of shortlisted preferred vendors which shall be updated and approved by the management from time to time.
3. Notwithstanding the provision in ii above, minor purchases and procurement under emergency conditions may however be exempted subject to override by the MD.
4. All purchases process shall commence at least 3 days, where practicable, before the date of delivery, except in case of emergency as approved by the MD.
5. All requisitions shall be raised by the requesting department on approved form and submitted to procurement/purchasing department.
6. Requisition must be done from approved budget of each requesting department or project.
7. The procurement process shall commence by the purchasing department issuing out written Invitation to Tender to all preferred vendors or contractors for the related product, requesting them to submit quotation or Proforma Invoice for the proposed transaction.
8. The Purchasing Department on the basis of documented quotations or Proforma Invoices received from all approved preferred vendors or contractors for the related product or service shall determine the best preferred vendor using price, quality, and terms of sale and track records of past performances as a basis for selection.
9. The best preferred vendor or contractor chosen shall be issued a Purchase Order as authority to supply the requested product.
10. Ideally, the first two approved preferred vendors or contractors shall be given priority to concentrate the company’s business with them while the remaining approved vendors shall be used for price comparison and negotiation with the major preferred vendors.
11. In the case where the major preferred vendors are unable to meet up with the negotiated price and terms of sale, then the best preferred vendor among the remaining preferred vendors shall be issued the Purchase Order.
12. Any vendor that violates (Company’s Name) procurement procedure in terms of quality malpractices shall be blacklisted from the approved vendors’ lists and will not transact business with (Company’s Name) unless exempted by the MD.

The finance department shall effect payment to the vendors or subcontractors on the basis of the following:

• The Purchase order is appropriately signed by the authorized persons.
• Evidence of Delivery of the items/materials purchased.
• Where the item procured is service and not material items, the supervising department must issue job completion certificate to the contractors as evidence of work done.
• In a situation where an item will be purchased on cash basis, the cash will be released to the officer making the purchase as an Advance, and this must be duly retired by invoices, receipts and evidence of delivery confirming that such item is brought in to the office or site.

Authorized Signatories on Purchase Order

All purchases order must be approved and signed by the project manager with the finance manager as the second approving signatory, and the MD to be the final approving authority.

Procurement Requisitions

All requests for procuring supplies, equipment and services shall be submitted to the procurement officer with a request using the standard form of (Company’s Name).

The requisitions shall include the following information:

• A clear, concise statement of what is required, this may consist of a simple description or a fully developed specification.
• A detailed technical specification or statement of work, where applicable, prepared by the requisitioning officer on a separate sheet as an attachment to the requisition.
• A contact person designated to answer questions concerning the requisition, in the case of contracts for large and complex goods and services. The contact person designated must be available throughout the procurement process.
• Delivery or completion date required.
• The total estimated quantity and costs.
• The recommended supply(s)
• Any other comment or notes necessary and relevant to the conduct of a conclusive and successful procurement exercise.

Policy Commencement Date

This policy takes effect from 1st June, 2017.

This policy may differ from company to company depending on their organizational structure and goals. The above Procurement Policy can be adjusted to suit your organizational needs. You can copy this Procurement Policy and edit it for use in your company.

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