7 Steps for Successfully Managing Public Procurement and Reducing Costs

Public procurement is the lifeblood of your business because it ensures the continuity and success of operations. From construction materials essential for building structures to medical equipment that saves lives, and even the food that nourishes communities, public procurement plays a vital role across various sectors.

What is Public Procurement?

Simply put, public procurement is the process of acquiring products or services that an organization—whether it’s a company, government agency, hospital, hotel, or even a household—needs from external sources (suppliers). This process involves a series of interconnected steps, including identifying needs, finding suppliers, negotiating prices, receiving products, and ensuring their quality.

Importance of Public Procurement

• Ensuring Business Continuity: By providing the necessary products and services at the right time and in the required quantities, procurement ensures smooth operations and helps avoid delays or interruptions.
• Improving Efficiency: Obtaining the best products at the best prices and quality helps enhance the organization’s performance and boosts productivity.
• Cost Reduction: Through negotiations with suppliers, securing discounts, and selecting the most efficient shipping and storage methods, procurement helps lower overall costs.
• Quality Enhancement: Choosing reliable suppliers who adhere to high-quality standards ensures that excellent products and services meet the organization’s needs.
• Supporting the Local Economy: By working with local suppliers, procurement contributes to economic growth and job creation.
• Fostering Innovation: By sourcing the latest products and technologies from around the world, procurement helps organizations stay up-to-date with market trends and advancements.
• Enhancing Company Reputation: Committing to ethical and transparent dealings with suppliers strengthens the company’s image and builds trust with clients and partners.

Types of Public Procurement

Public procurement encompasses a variety of products and services, such as:

• Building materials (cement, steel, bricks, wood, sanitary tools, paints, etc.)
• Heavy equipment (excavators, loaders, trucks, cranes, etc.)
• Electrical appliances (refrigerators, washing machines, air conditioners, ovens, etc.)
• Office furniture (desks, chairs, cabinets, shelves, etc.)
• Medical supplies (medications, medical equipment, consumables, etc.)
• Food supplies (fresh vegetables and fruits, meat and poultry, dairy products, canned goods, etc.)
• Computers and laptops (desktops and laptops from leading brands)
• Air conditioning units (split, window, and central units of different capacities)
• Printing and copying machines (various models of printers and copiers)
• All office supplies (pens, notebooks, files, and other stationery)
• Cleaning supplies (detergents, disinfectants, cleaning tools, etc.)
• Buffet supplies (tea, coffee, sugar, cups, and other buffet essentials)
• Water pumps (pumps of various capacities and types)
• Service trolleys (service carts in different sizes and shapes)
• Maintenance contracts (for computers, laptops, servers, printers, faxes, air conditioners, vehicles, elevators, and escalators)

8 Steps for Successful Procurement For any procurement process to succeed, several interconnected steps must be followed:

1. Identify Needs: Determine the type, quantity, and specifications of the products or services required, considering quality, budget, and timeline.
2. Research Suppliers: Look for reliable suppliers, compare prices, quality, and conditions, and ensure the supplier’s reputation and experience in the market.
3. Negotiate Prices and Terms: Negotiate with suppliers for the best prices, terms, quality guarantees, and after-sales services.
4. Issue a Purchase Order: Send a formal purchase order to the supplier that includes all order details, such as product type and quantity, price, payment terms, and delivery date.
5. Receive Products: Accept the products and verify they meet the required specifications and quality through necessary inspections.
6. Pay Dues: Settle payments with the supplier according to the terms agreed upon in the purchase contract.
7. Monitor Supplier Performance: Evaluate the supplier’s performance based on specific criteria, such as quality, adherence to deadlines, delivery speed, packaging, and customer service.
8. Ensure Compliance: Confirm that the company holds the necessary licenses and certifications and complies with all laws and regulations related to public procurement.

Working with a reliable and experienced procurement company, such as Misr Investment Company, is one of the most important factors for ensuring successful procurement operations and achieving organizational goals.

Public Procurement in Egypt

The public procurement market in Egypt is large, diverse, and constantly growing. Numerous companies provide procurement services across various sectors, playing a critical role in meeting the needs of businesses, government institutions, and individuals.

Real-Life Examples of the Importance of Public Procurement:

• In Construction: Contractors rely on public procurement to acquire the building materials and heavy equipment necessary for completing projects. Any delay in the supply of these materials can result in project delays and significant financial losses.
• In Healthcare: Hospitals and medical clinics depend on public procurement for medications, equipment, and supplies essential for providing patient care. A shortage of these materials could endanger patients’ health.
• In Education: Schools and universities rely on public procurement for textbooks, school supplies, furniture, and educational equipment. A shortage in these items could affect the quality of education.
• In Hospitality: Hotels and restaurants depend on public procurement for food, beverages, cleaning supplies, furniture, and equipment. A lack of these supplies could negatively impact service quality for guests.

Logistics in Public Procurement Logistics is a crucial part of the public procurement process. It encompasses all activities related to the transportation, storage, and distribution of products from the supplier to the client. Logistics services include:

• Transportation: Moving products from the supplier to the client using appropriate transport, such as trucks, ships, or planes.
• Storage: Storing products in secure, well-equipped warehouses to protect them from damage.
• Distribution: Delivering products to clients at the right time and place.
• Packaging: Safely and efficiently packaging products to ensure they reach the client in good condition.
• Customs Clearance: Completing customs clearance procedures for imported products.
• Shipment Tracking: Tracking the movement of shipments from the supplier to the client and providing updated information on their location and status.

Technology in Public Procurement Technology plays an increasingly important role in enhancing the efficiency and effectiveness of procurement operations. Some key technologies in this field include:

• Inventory Management Systems: These systems help track stock levels, forecast future needs, and manage purchase orders.
• Shipment Tracking Systems: These systems help track shipments’ movements from the supplier to the client and provide up-to-date information on their location and status.
• E-commerce: E-commerce facilitates the buying and selling process online, offering many opportunities to reach new suppliers and innovative products.
• Data Analysis: Data analysis can be used to understand purchasing patterns, forecast future needs, and improve the efficiency of procurement operations.

Managing Risks in Public Procurement

Public procurement companies face several risks, such as:

• Supply Chain Risks: Delays in shipments, product damage during transport, and price fluctuations.
• Quality Risks: Products not meeting required specifications or having defects.
• Compliance Risks: Non-compliance with laws and regulations related to public procurement.

These risks can be managed through:

• Proper procurement planning, identifying potential risks, and setting up contingency plans.
• Selecting reliable suppliers capable of meeting requirements on time and with high quality.
• Insuring shipped products against damage and loss.
• Diversifying supply sources to reduce dependence on a single supplier.
• Monitoring product quality and conducting necessary inspections to ensure compliance with specifications.
• Ensuring adherence to laws and regulations governing public procurement.

Summary Public procurement is a critical and essential process for the success of any organization, regardless of its size or industry. By understanding the importance of public procurement, its steps, types, and the challenges it faces, companies and institutions can make better decisions in this field and ensure they receive the products and services they need at the best price and quality.

Choose an expert procurement management company. Choose Misr Investment Company—the best, as endorsed by thousands of clients.