For many SMEs, procurement is often not a strategic function but transactional one. Purchases are only made when inventory runs out or when there is an urgent need to meet a demand. This reactive approach results in wasted money, operational disruptions and missed growth opportunities. 

Procurement planning is a strategic approach for sourcing goods and services efficiently, leading to reduced cost of operations and boosting business continuity. Strategic procurement is not just about buying but managing your purchases to achieve operational resilience and support business growth. 

Why Procurement Planning Matters

Procurement planning is necessary to ensure strategic alignment, cost management, risk mitigation and sustainable operations. 

1. Cost Savings and Cash Flow Management 

Emergency purchases usually result in maverick spending and cost more. It does not allow for a proper value for money assessment or take advantage of favourable market conditions. Procurement planning allows SMEs to:

• Plan purchases around cash flow cycles
• Conduct competitive procurement and negotiate better prices with suppliers 
• Avoid overspending on last minute purchases 

2. Supply Chain Resilience 

Many SMEs face frequent supply disruptions including logistics delays, material shortages and regulatory pressures. In this regard, procurement planning is useful for:

• Identifying multiple supply sources for key materials.
• Maintaining a buffer stock to minimise shortages.
• Preparing contingency plans to manage supply risks.

3. Compliance and Market Readiness

The regulatory landscape is rapidly evolving with governments and international bodies demanding proof of quality, traceability, sustainability and ethical responsibility. Procurement planning helps to:

• Ensure compliance with local, regional and international regulations.
• Prepare for export opportunities under preferential trade agreements like AfCFTA. 
• Enhance credibility with sustainability conscious investors and customers. 

4. Stronger Supplier Relationships 

Building strong supplier relationships is an essential element of strategic procurement. Procurement planning can help businennes build trust with suppliers, leading to:

• Collaborative problem solving and innovation.
• Favorable payment and delivery terms. 
• Priority deliveries during high demand periods. 

5. Improved Customer Satisfaction 

Procurement planning helps to ensure the right product is available at the right time, at the right place, in the right quality, in the right quantity and for the right price. This ensures stock outs are reduced and reliability is improved to meet customer demand and boost loyalty.  

How SMEs can Implement Procurement Planning 

SMEs can implement the following practical steps:

1. Analyse Current Procurement 

Identify what you buy, who you buy from, how often you buy and how much you pay for them to uncover patterns, gaps and cost savings opportunities. 

2. Forecast Demand 

Use sales data, seasonal trends and relevant market insights to anticipate future demand. 

3. Develop a Procurement Plan

Create a list of what is needed, potential suppliers, budgets, timelines, procurement methods and approval requirements. 

4. Engage Multiple Suppliers 

Maintaining multiple suppliers creates price competition, which helps control costs while diversifying supply sources to reduce risk and maintain operational continuity.

5. Leverage Technology 

Use affordable technologies to track inventory levels, purchase orders, deliveries, payments and supplier performance. 

6. Set Internal Controls

Set multiple approval requirements in the procure to pay process and require at least two people to be involved in all procurement activities to minimise corruption and procurement fraud. 

7. Review and Adjust Regularly 

Procurement planning is dynamic. Implement regular reviews, adjust plans based on changing demand, market conditions and supplier performance. 

Conclusion

Procurement planning is strategic growth lever. SMEs should adopt a strategic procurement approach to reduce costs, mitigate risks, build strong supplier relationships and improve both investor and customer satisfaction.

Stop reacting. Start planning. Stop bleeding cash. 

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