What is Procurement Audit All About?

Procurement Audit
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Whenever there is a change in the landscape of a company due to any reason, for instance, launch of new service or product, or merger and acquisition, the procurement operations of the company are affected substantially. If there is no clear visibility in the supplier contracts and expenses, the procurement operations and the strategic direction of the company can easily get misaligned. A procurement audit can be of great help in such a scenario.

What is Procurement Audit?

Procurement audits are performed by procurement service providers to analyse the activities of the company and provides a clear picture of the buying and selling trends. These audits help companies in improving their calculations, risk-management and offer an overall view of the performance of the company. Moreover, the outcome of such audits provides a number of ways in which companies can reduce their spending and improve the quality of the manufacturing process to further improve the bottom line.

As a matter of fact, a large number of companies go through such audits on a regular basis irrespective of whether or not any major change, like launch of a service or product, etc. has taken place. These companies think of procurement audit as a strategic measure which allows them to identify opportunities where the costs can be reduced and overall operations can be further improved.

Benefits of Procurement Audits

A procurement audit not just helps in finding the cause of the current problems in an organization, but also helps in identifying opportunities for establishing procedures and processes for efficiency and sustainability on a long-term basis. During these audits, the procurement processes, workforce as well as the technology being used in the process is assessed to identify challenging areas as well as the best practices and strengths of the organization.

While many of the organizations have their own procurement departments, they do not possess the leverage, time, tools or the market intelligence to ensure that they get the best supplier and best prices for every single service or product that they procure. Also, even when the pricing agreement is the best in class, auditing of the supplier and the pricing is not conducted on a regular basis to make sure that the identified savings are actually obtained. As a result, many of the organizations prefer getting these audits done on a regular basis as it helps in improving relationship with the suppliers, ensuring that organization gets the services and products at the best of prices and the savings are obtained.

Moreover, as the procurement service providers thoroughly understand multiple industries, the audits will help in creating and implementing strategies and procedures that can help organizations to achieve an edge over its competitors. It is with the expertise of the procurement service providers that organizations can chart a course which will take their procurement operations to a higher echelon.

Choosing a Procurement Audit Provider

When it comes to choosing a procurement audit provider, it is very important to choose a company that has vast experience in conducting such audits. They should have a dynamic group of professionals who are well-aware of the current market trends to ensure that they are able to provide you with results that can actually make an impact on your procurement operations.

Another important consideration is to ensure that the company you choose for procurement audit should have experience of conducting audits for companies that are in the same business as yours. This will ascertain that the company actually understand the requirements of your industry and can provide you with useful industry-based solutions.

Organizations of all sizes can benefit from procurement audits and can gain a business edge to perform better than the competitors.

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