Purchasing & Procurement Procedure [ISO 9001]

What is the Purchasing & Procurement Procedure?

The purchasing and procurement procedure for ISO 9001 ensures all purchasing and sourcing strategies and processes to acquire goods and services are transparent, cost-effective, timeously and objective. The policy is rooted in ISO's deep commitment to improving performance continuously.

Contents

Usually, the purchasing and procurement procedure policy will apply to all relevant staff members like the directors, managers, staff, and agents responsible for either purchasing or managing key accounts and contractual agreements resulting in the supply of goods and services. The policy should be shared with all vendors to create a uniform and transparent process.

Procure stock from shelves

What Are The Policy Definitions?

It usually has a particular set of definitions outlining specific terminology deemed essential to read and understand the policy.

  • Tender/Proposal/Bid: This is an offer from a potential vendor when responding to an invitation from the company to supply goods.
  • Procurement Manager: This person is the head of the purchasing department. Responsible for all procurement and develops all templates
  • Procurement Process: This is the process to follow to meet all dedicated regulations and procedures around procurement.
  • Request for Interest (RFI) or Request for Proposal (RFP): A specified invitation from the company outlining a specific need. Perimeters are usually set out carefully.

An Overview Of The Procurement Process and Confidentiality

Usually, the Procurement Policy will apply to all purchases of services and goods. Not every purchase will go through a formal tender process but will constantly be subjected to the policy procedures.

  • Adherence to this policy remains the responsibility of the procurement unit within the company.
  • The procurements need to remain within the expenditure budget.
  • Constant monitoring is done by the Procurement Manager and The CFO of the company.
  • Although parts of the policy are shared with potential vendors or existing vendors, most procurement processes are deemed confidential.
  • Tenders and offers to supply are strictly confidential and are never shared with competitors. This ensures fair competition.
  • The outcome of the tender decision may be shared with the vendor and reasons for not being accepted.
  • All records need to be kept for each tendering process.

The Delegation of Authority

Each company will set out in their Purchasing & Procurement policy the ‘Delegation of Authority’ procedures.

  • Rules on how to financially engage the company
  • Rules of engagement to vendors
  • Avoidance of verbal commitments or agreements
  • The Procurement Policy is to be read in conjunction with the company’s Delegation of Authority/Internal Procedures. The latter always takes precedence

Windmills sustainable

Ethics and Sustainability

This will outline the company's dedication to meet the company's guidelines, country, United Nations, WHO, WTO, and any relevant authority that sets out laws and policies for ethical business and sustainability.

Implementational references should include:

  • NF X50-135 – 1:2012: Purchasing function – Sustainable purchasing - Guide for the use of ISO 26000 - Part 1: Policy-Strategy
  • NF X50-135 – 2:2012: Purchasing function – Sustainable purchasing - Guide for the use of ISO 26000 - Part 2: Operational deployment
  • BS 8903:2010: Principles and framework for procuring sustainably – Guide and ISO 20400:2017 Sustainable procurement — Guidance and ISO 26000:2010 Social responsibility.

The policy should make staff accountable to the Code of Conduct and The Ethics Code. In context to the policy, issues that fall under this section would be:

  • Sound risk management
  • Transparency
  • Accountability
  • Auditability

Any deviations from this policy and its procedures should be reported to the relevant line manager. All procurement processes should be compliant with the following:

  • Unbiased, fair, and include a varied pool of vendors.
  • Adherence to all laws and regulations is a strict requirement.
  • Should be consistent with the ethics and social responsibility procedures and best practices.
  • Engagements on behalf of the company must be authorized as set out in the Delegation of Authority policy procedures.
  • Responsibility of the Procurement Department and the Procurement Manager.
  • Selection of the vendor should be made according to all criteria met, free from bias.
  • Records of each procedure and procurement must be kept in the correct auditable manner.
  • Contracts are set out by the company’s legal department in line with its internal policies.

Suppliers

Risk Management Analysis

Irrespective of the expenditure, all purchasing must include a risk management analysis. This is done because the company is engaging external sources that could directly expose it to many risks. The relevant unit is responsible for conducting the RMA.

Artificial Limit Compliance

  • The expenditure limits ensure procurement processes are appropriately conducted.
  • Contracts and project splitting is prohibited as it increases risk.

Auditability and Accountability

By law, records of procurement and purchases should be kept according to company procedures for auditing purposes.

  • The original paper copy and or electronic copy is to be kept for a minimum of 10 years.
  • Who ordered the acquisition and how?
  • The approval process from all relevant managers
  • The sourcing records from the supplying company
  • Vendor performance appraisals
  • Any disciplinary actions against said vendor

Continuous Improvement

The procurement department of the company should continuously strive to improve on all processes. This includes;

  • Regular training of all staff
  • Regular assessments on procedural processes
  • Key account development with vendors needs to be an ongoing priority.

Suppliers

Suppliers, Vendors And Consultants

Preferred vendors, suppliers, and consultants need to demonstrate that they comply, respect and adhere to the health and safety, fiscal, environmental, and employment regulations.

Call for Tenders - RFP Criteria

  • An essential part of a formal procurement plan
  • Due consideration should be given to how the call for tender is released
  • Adequate description of goods or services needed
  • Awarding criteria set out

Open Or Restricted RFP

  • Should preferably be open and advertised as widely as possible
  • Restricted RFP should only be done if there is a specific number of vendors contacted directly
  • Derogations need to be authorized by the PM and all records pertaining kept.

Purchasing & Procurement Templates

Templates are the responsibility of the Procurement Manager. These assist the procurement staff in engaging vendors with a very detailed approach.

The criteria of the RFP include the following;

  • Competitive costing of the offer
  • Service level coverage
  • Ability to meet deadlines
  • Stability and profile of the company
  • Company compliance with all regulatory bodies
  • Experience and references
  • Ease of procedural implementation
  • Communication/technology
  • Innovations
  • Project management and implementation
  • Environmental compliance and contribution
  • Fiscal adjustability to company’s financial requirements
  • Future developments

Selecting stormtroopers

Selection Process

  • Neutral and transparent
  • Cost-effectiveness
  • Risk analysis adherence
  • Correspondence to the Delegation of Authority policy

Contracts, Principles, Review, and Management

  • Subject to the compliance to the Delegation of Authority procedures
  • Subject to review by the legal department and quality management
  • All company terms and conditions must be used and adhered to, and reviewed in the event of any changes
  • Breeches carry disciplinary action set out in the contract
  • Record keeping for auditing is critical

Author: Richard Keen
Updated: 5th September 2021

Richard Keen

Richard Keen

Richard is our Compliance Director, responsible for content & product development.
But most importantly he is ISO's biggest fanboy and a true evangelist of the standards.
Learn more about Richard

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Purchasing & Procurement Procedure

The purpose of this procedure is to define the activities required to ensure that purchased products conform to the specified purchase requirements, by detailing the combination of supplier controls, purchasing requirements and purchased product inspection taking into account the potential consequences of a non-conforming product being delivered.

Forms & Reports also included:

  • Product & Service Provision Process Activity Map
  • Customer Property Log
  • Production Control Plan
  • Traceability Log

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