5 MIN READ
First we want to start with what is procurement. By definition, procurement is the strategic process of sourcing, purchasing, and managing goods and services to meet an organization's needs, encompassing everything from raw materials to software and office supplies.
For our purposes, we’re going to be looking at procurement for new builds, renovations, and operating locations. So this includes Furniture Fixtures and Equipment. Operational Supplies and Equipment, Construction materials, finishes and the like - all to find the perfect balance of price, quality and timely delivery.
Why you need a procurement strategy
Its necessary to have a step by step plan to prevent chaos and ensure all the right items are ordered, delivered, and paid for as expected. All processing from purchasing to supplier collaboration should be well organized to improve operational efficiency and reduce costs. With a procurement strategy and system, you can
- provide visibility for all stakeholders in the chain - designs, project managers, clients, suppliers, installers, you name it.
- track costs from budget to invoice to reconciliation for reducing costs and controling spending
- Build long-term relationships with competitive suppliers
- Minimize possible risks with suppliers
A procurement strategy ensures you are allocating efforts and resources in the best way to make your purchasing workflow as beneficial as possible
Setting up your procurement strategy in the right tool
Procurement software will help you:
- Eliminate manual data entry
- Automate time-consuming purchasing operations
- Boost employee productivity
With the right tool in place, you want to start by gathering a list of all your preferred suppliers, clients, consultants, GCs, and anyone else involved in the procurement process.
Set up workflows, policies and access
We also want to make sure the right workflows, policies and access is set up. With a procurement tool like Fohlio, you can set up workflows like deciding which stakeholder needs to approve a PO when it exceeds $100,000. You can also fine tuned the permissions for each stakeholder.
This is done by first defining users by their role. For example, you can have purchasing agents by region, library managers, suppliers, warehouse workers, etc. You can then customize the access level per role, controlling which features they can view and edit, what project sheet actions they can take, and which columns they are allowed to see and edit.
For example, you wouldn’t want your suppliers to have access to all your pricing columns. And you’re warehouse members don’t care about client approval, so long as it’s been ordered, they likely just want to see the items description, size, weight and the expected arrival dates.
Once those are in place, we can start the process.
The procurement process
Now of course, you can break down the process numerous ways, but here’s one process flow we’ve seen procurement agents using to ensure smooth operations:
Specification > Budgeting > Ordering> Submittals > Expediting > Installation > Punch Lists > Closing
In Fohlio, you can have each of these phases broken down into tabs within the project, which shows only the relevant columns for that phase. We also have different dashboards set up that show only the relevant phases or tabs for each job role. Let’s take a closer look at the details that go into each step and how they should be managed.'
Specification
Starting with specification tab, it’s typical to see all of the very granular specification details received from the design team, clients, or their contracted designers.
With a system like Fohlio, the designers can either be a part of the system and already uploaded the specs directly into the system, or the designers may have just provided you with an excel sheet or pdf of the specifications. If the latter is the case, with Fohlio, you’ll be able to quickly upload those specs into the system organized into your format structure for easy managing.
Regardless of the system you use, we highly recommend giving categories to each item, as this allows us to group by category. You can get as detailed as you need. For example, for this project, in the furniture category, we're able to confirm we have the model name, if there's a model number or the finish color, and then, we also can have a bunch of different category specific columns to make sure are completed if needed, like weight, fabric finish, and wood species. Detailed specifications can be put in place for every category and spec.
Having this information set up and having the different categories set up really helps to make sure we have all of the details needed from design or from your clients in order to accurately budget for the project.
Budgeting
Then we have our budgeting phase of the project. The purchasing and design teams collaborate closely to find vendors that align with project goals. This is when your sending RFQs to vendors and collecting information to put your budget together.
Using Fohlio, we can provide role-defined access to project specifications and send RFQs to vendors directly within the platform. Vendor responses are tracked seamlessly, reducing miscommunication and ensuring all data remains in one place.
The purchasing assistant compiles full budget comparisons with pricing from various vendors, factoring in criteria such as manufacturing locations, vendor reliability, and lead times to meet project deadlines. This ensures that our selections fit within the budget, timeline, and brand standards.
Here, we can have, for example, the trade price, RFQ Status, and of course many other columns like automatically calculated extended costs, supplier, lead times, verifying who is installing which items, and estimated freight costs, really any additional soft costs - one that’s becoming more relevant today is tariff rate.
You can use all of this information to build a budget for your project.
A comprehensive budget analysis is the foundation of any successful procurement project.
Ordering
Once the budget is approved, you begin submitting orders. In this phase, you want to track when POs were issued, vendor order numbers confirmed, estimated ship and arrival dates, and invoices, so we can verify which piece belongs to which order.
Submittals
With the order tracking, we want to make sure all submittals are approved - in the submittal phase we’re just making sure submittal docs are uploaded, shop drawings are added and approved, and any submittal notes are recorded.
Expediting
The expediting phase is there to stay on top of the timeline. Here, we have information like lead times and then details from the logistics partners to verify the product is shipped, received, and in good condition at our warehouse. FF&E purchasing management is logistics-heavy, requiring attention to detail across the board.
Leveraging Fohlio to track purchase orders by line item, from creation to delivery, ensures you capture essential details like tracking numbers, estimated arrival dates, and damage reporting.
Fohlio provides a transparent cost breakdown, including packaging, shipping, installation, and taxes, which ensures our budgets remain accurate and accountable.
The expediting phase can be and if often shared with warehouse members so they can enter this information in themselves, instead of project managers needing to manually re-enter the data from an email update the warehouse team might send.
Installation
As the project nears completion, our focus shifts to installation and final inspections. We use the installation phase for planning our installation.
If you have multiple installations or documents that the vendors provided, you’ll want to pull all of that together. We can use this tab to create reports to send to our third-party installers or installation teams, so they have all the information quickly.
Create an advanced data sheet, pdf grid view presentation, PDF table presentation with all of the information you want, and then we export that information.
Punch Lists
If an item arrives damaged, missing items, malfunctioning, or some other mishap, it gets tracked in the punch lists phase. A receiver can update the item with an incident status, add additional comments, and upload a picture of the issue. Then you can assign the issue to a team member who will then be responsible for checking and resolving the issue. This ensures all issues are resolved prior to project handover.
Remember that the item is the same item is fohlio, we’re just collecting this information in different stages. All of this data is connected to the same specification item. If you wanted, you could create one tab that shows all of the column data for the specifications.
Closing
At late, we reach the closing phase, where we would include final inspections, reports, and ensuring all aspects of the project are complete before final handover to the client.
Although this is the final step everything is just beginning. It’s a process that must be analyzed, overviewed, and measured.
Analyze, overview and measure
We want to make sure we always track:
Cost and Savings
How do prices change, and how are we saving?
With the cost analysis, we can see our saving by looking at the trade discount or comparing the MSRP to the trade price.
The Spend
To see how effectively we are spending, we can look at the budget analysis, comparing our budget consumed to the specification costs and procurement invoiced amount.
Our Suppliers
How efficient is spending per supplier? Are supplied specs meeting expectations?
With Fohlio, you can generate customizable reports, track shipments efficiently, and make informed purchasing decisions based on real data.
With the cross-project reporting capabilities, manages can sign in and easily see within one screen, which items are ready for purchasing, without having to look project by project. And you can group by supplier to see how often and how much you are purchasing from suppliers across projects for better negotiating power.
For example, a franchised hotel owner may only want to buy 20 mattresses, but across the franchise, thousands of mattresses are getting ordered. The franchise, can negotiate a deal with the mattress manufacturer for a bulk discount that can be applied across all the orders.
Our Processes
How efficient is each step of the process time- and cost-wide?
Overall, when implementing Fohlio, Designers and Procurement agents see a 53% decrease in duplicate work, 36% faster approvals, and 7 hours per week saved on specifying.
Procurement 101 highlights
Process Management: Ensure there are clear procedures in place for each procurement phase to ensure seamless collaboration
Effective Tools: Necessary for organized data storage and tracking. Pick a tool that fits to your processes, not one where you need to change your processes to fit the system's capabilities
Reporting Capabilities: Put your captured data to use. Build reports on product quality, vendors used, etc. to get more out of the next project
With a proper process set up in Fohlio, you can ensure you’re reaching the optimal balance between Price, Quality, and Timely Delivery.
If you’d like to learn more about how Fohlio can support your procurement needs, book a consultation here.
