What Is Operational Procurement? Process, Examples & How to Improve Efficiency

As a matter of fact, business thinkers come in two flavors: those who think big and those who get things done. Strategic procurement is like the big thinkers—it’s determining the major partners for the next five years. Operational procurement as such is the “doing.” It encompasses the daily grind of a business that keeps the lights on, the printers fed with ink, and software subscriptions met.

If this process runs well, it is the least things people think of. But if it fails, even the most minor things can hold up a product launch or office work on a daily basis. Here is how you can fix it.

Operational Procurement Definition

In layman’s terms, operational procurement is requesting, ordering, and paying for those things which a business requires day by day, in order to keep functioning. Hence, the nature of the function is transactional. Other teams might concentrate on contracts that run over a couple of years, but the operational team is all about the present moment: delivering the correct product to the right customer quickly.

What Are Included in Operational Procurement?

Of course, it is not just about hitting the “buy” button on a site. It requires the company to choreograph several specific activities internally and to be externally compliant as well:

• Purchase Requisitions: The very first “ask” of an employee who wishes for something.
• Purchase Order (PO) Creation: The conversion of the approved task into a document that is legally binding for the vendor.
• Vendor Communication: Making enquiries on lead times and delivery dates.
• Approval Workflows: Making sure that the correct managers have authorized the spending.
• Order Tracking: Having an accurate picture of where your items are.
• Goods Receipt: Verifying that the goods delivered correspond to the ones that were ordered.

Operational Procurement Process (Step-by-Step)

The operational procurement process works like the baton passing in a relay race. The chain of events has to come in order before the team or the individual can cross the winning post:

The Need Is Identified

It is realized by an employee that a certain tool or service is required.

The Requisition Is Filed

The formal request is made internally.

The Request Goes For Approval

The requester’s manager is the person who budgets the activities and, hence, decides whether a purchase is necessary.

PO Is Made

The vendor will receive the purchase order once the request has been approved.

The Vendor Gets To Work

The vendor prepares and ships the order.

The Goods/Services Are Received

The items arrive or the service is performed.

The Invoice Is Checked

To ensure that the bill is accurate, it is compared with the purchase order and the receipt.

Paying Off

The finance team is the one that settles the bill.

Strategic Procurement vs Operational Procurement

It is helpful to see these two side-by-side to understand why you need both:

Strategic Procurement	Operational Procurement
Focuses on long-term goals	Focuses on day-to-day tasks
High-level supplier selection	Order execution and tracking
Cost savings strategy	Transaction management
Negotiating master contracts	Processing POs and invoices
Happens once or twice a year	Happens dozens of times a day

How to Reach Operational Excellence in Procurement

Obtaining operational excellence in procurement is impossible if you continue to communicate through haphazard emails. Instead, you should move towards a well-structured system. Here are a few best ways to accomplish that:

• Your System Should Be Centralized: Each department should not be allowed to maintain its own spreadsheet. Collect all requests into one platform.
• Automate Approvals: A bottleneck occurs when a manager has to search for an email if he or she has to approve a purchase. Automation is the solution to this issue.
• Real-time Tracking: You must always know what part of your budget is still available before you can click on “approve.”
• 3-Way Invoice Matching: This feature looks at the PO, the receipt, and the invoice, thereby making it possible to detect mistakes and solve them before payment.

The Role of Procurement Operations Management Software

The current procurement operations are extremely complicated to be handled manually. In such a case, software assists companies by providing a “guardrail” for their expenses. It helps spot the limits of the budget, sees that a security check is done for every single vendor, and, finally, maintains a digital paper trail for each and every purchase. In other words, while a poor office is like a zoo, a well-oiled machine is the way this one looks.

How Zapro Optimizes Operational Procurement

Where Zapro comes in is solving the headache arising from procurement ops management.

Zapro automatically takes the flow of events from the very first request to the payment without managers having to give their initials or purchase orders being manually typed out. It provides users with an up-to-the-minute budget and therefore ensures that only approved, safe vendors are used. In brief, instead of a manual chore, it is a streamlined, digital process.

Practical Illustration of Operational Procurement

Say, a marketing team is in need of a new project management tool. If these people are working in a traditional way, they might just buy the tool on their business credit card and would ask for a refund later on. The finance team would literally have a nightmare.

If the setup is optimized, the team, first of all, submits the request in their procurement system. After that, the system verifies the budget, gives the request to the Head of Marketing for approval, and, finally, automatically interacts with the IT department to make sure the software is safe. The purchase order is sent to the vendor at the same time as the finance team are being alerted. Everything is tracked, legal, and orderly.

Key Advantages of the Optimized Operational Procurement

• Shorter Time Cycles: It is a matter of hours not weeks before you have what you want.
• Reduced Number of Errors: Automation is your best friend when it comes to avoiding double payments and wrong orders.
• Enhanced Control: You will be able to remove the risk of “maverick spend” in advance.
• Vendor Satisfaction: Suppliers must enjoy working with companies that give clear purchase orders and promise timely payments.
• Audit-Ready: Tax season is no longer your enemy because you have a clean record of every purchase.

Conclusion

If we think of operational procurement as the “daily” side of the business, then it is the facilitating factor of the big strategic goals, that it is impossible for them to be realized even in theory without it. By making procurement efficient internally through operations your team gets freed, eventually, to focus on work that genuinely grows the business, instead of getting stuck in a mountain of paperwork.

FAQ

What is the main distinction between strategic and operational procurement?

Strategic is the “plan” (negotiating contracts and picking partners), while operational is the “action” (ordering items and paying invoices).

How does operational procurement contribute to business efficiency?

It is a bottleneck solution. If there is no good operational flow, teams can’t get the tools they need to do their jobs, and hence time is wasted and productivity decreases.

What tools are employed in procurement operations management?

Commonly a mixture of e-procurement platforms, spend analytics dashboards, and automated approval software such as Zapro is used.

How can automation help in operational procurement?

Besides removing the human element mistake, automation also speeds up the approval process, matches invoices automatically, and ensures that no one spends money without permission.

What challenges are typical in procurement operations?

Top three challenges are: approval times being slow, budget visibility being insufficient, and shadow IT where employees buy things without ​‍​‌‍​‍‌​‍​‌‍​‍‌permission.