Supply Chain Management – Procurement Controls
In today’s Supply Chain Management world having effective controls in place and in practice for procurement ensures transparency, efficiency, and compliance with regulations.
Segregation of Duties:
Procurement Policies and Procedures:
Develop comprehensive policies and procedures to outline the procurement process, including vendor selection, bidding processes, contract negotiation, and payment procedures. These guidelines should be documented, communicated, and regularly updated.
Approval Authority:
Establish clear guidelines for the approval of purchase requisitions, purchase orders, and contracts. This ensures that purchases are authorized by appropriate personnel and align with budgetary constraints and organizational requirements.
Competitive Bidding:
Implement a competitive bidding process for significant purchases to promote fair competition and obtain the best value for the organization. This includes defining bidding criteria, advertising requirements, and evaluation procedures.
Vendor Evaluation and Selection:
Establish criteria and a structured process for evaluating and selecting vendors. This includes assessing factors such as price, quality, reliability, financial stability, and past performance.
Contract Management:
Implement controls for contract creation, execution, and management. This includes maintaining a centralized contract repository, monitoring contract compliance, and conducting periodic contract reviews.
Financial Controls:
Implement controls to ensure accurate and timely financial reporting, including budgetary controls, purchase order matching, and invoice verification processes.
Record Keeping and Documentation:
Maintain complete and accurate records of all procurement activities, including purchase orders, contracts, invoices, and vendor communications. Proper documentation helps ensure transparency, facilitate audits, and mitigate risks.
Training and Awareness:
Provide training programs to procurement staff to enhance their understanding of procurement policies, procedures, and controls. Regularly communicate updates and changes to procurement practices to maintain compliance.
Internal Audit and Monitoring:
Conduct periodic internal audits to assess the effectiveness of procurement controls and identify areas for improvement. Regular monitoring and reporting on key performance indicators can help identify potential issues and ensure compliance.
Control Tower:
Create and publish a Control Tower providing constant and consistent visibility of the activities within the procurement process and organization. Ensure the Control Tower has triggers to identify rogue activities, actions inconsistent with policies and procedures, and for the more mature applications – drill down and drill through functionality.
It’s important to note that the specific controls required may vary depending on the nature of the organization, industry regulations, and applicable laws. It’s recommended to consult with legal and compliance experts to ensure the controls implemented align with relevant requirements.
RIGSERV has the solutions to help supply chain organizations implement procurement controls. Our team includes professionals who have managed global organizations with decades of experience in proper controls and oversight applications. Reach out to us today to see how we can help your organization become an industry leader in procurement controls.
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