Steps to Improve Your Procurement Process in 2025

Here are the steps that can help with procurement process improvement in 2025 – 

1. Identify Procurement Needs

Every successful procurement process starts with a clear understanding of business needs to ensure that purchases align with operational goals and financial constraints.

Procurement teams should collaborate closely with different departments, such as operations, finance, and supply chain management, to determine:

• What products or services are required? Define specific materials, equipment, or services essential for business operations.
• When are they needed? Establish procurement timelines to prevent delays and stock shortages.
• How do they align with business goals? Make sure purchases support long-term strategic objectives, such as cost reduction, sustainability, or quality enhancement.

A well-defined procurement need assessment helps avoid unnecessary purchases, prevents excess inventory, reduces costs, and improves efficiency. Organizations that rely on historical purchasing data, market research, and predictive analytics can better anticipate demand and adjust procurement plans accordingly.

Tip: Use data analytics and forecasting tools to assess procurement trends and optimize inventory management.

Also Read: Steps to Build a Successful Procurement Strategy

2. Purchase Requisition And Approval

Once procurement needs are identified, employees or departments should submit a purchase requisition (PR)—a formal request that initiates the procurement process. This document serves as an internal authorization for procurement teams to begin sourcing goods or services.

A well-prepared PR should include:

• Item descriptions and specifications: Clearly define the required product or service to make sure of accurate procurement.
• Estimated cost: Provide an approximate budget to align with financial planning.
• Quantity needed: Specify the required amount to prevent over-purchasing or shortages.
• Purpose of purchase: Justify the necessity of the procurement in relation to business operations.

Once submitted, the PR undergoes an approval process where managers, finance teams, or department heads review and validate the following:

• The necessity of the request
• Compliance with company procurement policies
• Budget availability
• Alignment with strategic business goals

Organizations can enhance efficiency by automating the purchase requisition workflow, ensuring faster approvals, minimizing errors, and preventing unnecessary delays. Digital procurement systems can track requests in real-time, provide alerts for pending approvals, and integrate with budget management tools to improve financial control.

Tip: Automate the purchase requisition process using procurement software to reduce errors, make sure of faster approvals, and support procurement process improvement.

3. Budget And Funding Checks

A key step in procurement is ensuring that every purchase aligns with the company’s budget and financial strategy. Unplanned expenses can strain resources, lead to budget overruns, and disrupt financial stability.

This step involves:

• Checking available funds: Confirm that a sufficient budget is allocated for the requested purchase to avoid financial shortfalls.
• Ensuring cost allocations align with financial goals: Purchases should support business objectives, whether it’s cost efficiency, operational expansion, or sustainability initiatives.
• Avoiding unnecessary expenses: Reviewing procurement requests helps eliminate redundant or low-priority purchases, optimizing spending.

Organizations that integrate spend analysis tools and real-time budget tracking systems can proactively monitor procurement costs, ensuring that expenses remain within approved limits. These tools also help identify cost-saving opportunities, detect financial inefficiencies, and improve long-term budget planning.

Tip: Establish a procurement budget that aligns with your company’s financial health and strategic objectives.

Also Read: Understanding Benefits and Importance of Procurement Market Intelligence

4. Supplier Solicitation And Evaluation

Choosing the right suppliers is critical for procurement efficiency and long-term business success. A well-structured supplier selection process makes sure that organizations partner with vendors who meet quality standards, deliver on time, and align with financial and compliance requirements.

Organizations should follow these key steps:

1. Request for Quotation (RFQ) or Proposal (RFP)
   1. Send RFQs or RFPs to potential suppliers with clear specifications, including pricing, quality expectations, lead times, and contract terms.
   2. Make sure detailed documentation is provided to avoid miscommunication and enable accurate cost comparisons.
2. Evaluate Supplier Capabilities
   1. Assess vendors based on key factors like cost-effectiveness, quality assurance, reliability, delivery timelines, and regulatory compliance.
   2. Look beyond pricing—consider supplier innovation, scalability, and ability to meet future business needs.
3. Shortlist and Select
   1. Compare proposals using a structured evaluation matrix.
   2. Conduct due diligence, including background checks, financial health assessments, and compliance audits.
   3. If needed, request sample products or trial runs to validate quality and reliability.

Organizations should also evaluate supplier risk factors, such as financial stability, reputation, and adherence to compliance regulations.

• Financial stability: Assess the supplier’s financial health to avoid disruptions due to bankruptcy or cash flow issues.
• Reputation and reliability: Check past performance records, industry reputation, and client testimonials.
• Compliance adherence: Make sure suppliers comply with regulatory requirements, ethical sourcing, and sustainability initiatives.

Tip: Develop a supplier scorecard to rate and compare vendors based on key performance indicators (KPIs).

5. Contract Negotiation And Order Management

Once a supplier is selected, contract negotiation is a crucial step to define expectations and protect both parties. A well-structured procurement contract ensures transparency, minimizes risks and establishes accountability in supplier relationships.

Key elements of contract negotiation include:

• Pricing and payment terms: Clearly outline agreed pricing, payment schedules, and penalties for late payments or cost variations.
• Delivery schedules: Set precise timelines for order fulfillment to avoid disruptions in operations.
• Quality expectations: Define product specifications, performance benchmarks, and quality control measures.
• Risk mitigation clauses: Include terms covering cancellation policies, supplier penalties, warranties, and force majeure to manage unforeseen risks.

Once the contract is signed, procurement teams must efficiently manage order processing and supplier coordination:

• Generate and issue purchase orders (POs): Formalize the procurement transaction with detailed documentation.
• Track shipments in real-time: Monitor delivery status and handle potential delays proactively.
• Ensure compliance with contract terms: Regularly review supplier performance and contract adherence.

Tip: Use e-procurement systems to manage contracts and automate order tracking for greater efficiency.

Also Read: Understanding MRO Procurement: Sourcing, Purchasing, and Category Management

6. Invoice Matching And Payment Processing

Once goods or services are delivered, ensuring accurate invoice processing is crucial for maintaining financial control and strong supplier relationships. Inaccurate or delayed payments can result in disruptions, disputes, and additional costs for the organization.

This step involves:

• Comparing the invoice, purchase order, and delivery receipt: Also known as three-way matching, this process verifies that the invoice matches the approved purchase order (PO) and the actual goods/services received.
• Approving invoices before payment: A thorough review prevents fraudulent transactions, incorrect billing, and duplicate payments.
• Automating accounts payable (AP) processes: Using digital invoicing solutions speeds up vendor payments, reduces manual errors, and enhances efficiency.

Why is accurate payment processing important?

• Make sure compliance with financial policies and contractual agreements is maintained.
• Prevents late payment penalties and maintains healthy supplier relationships.
• Enhances cash flow management by ensuring payments align with budget forecasts.

Many organizations are adopting AI-powered invoice processing solutions to detect inconsistencies, flag errors, and automate approvals, reducing administrative workload and increasing accuracy.

Tip: Utilize AI-powered invoice processing software to detect errors and prevent overpayments.

7. Post-Procurement Record Keeping

Procurement doesn’t end with payments, as proper record-keeping is essential for maintaining transparency, ensuring compliance, and optimizing future procurement decisions. Accurate documentation helps organizations track spending, evaluate supplier performance, and prepare for audits.

Key benefits of maintaining procurement records include – 

• Audits and financial compliance: Organized records ensure adherence to internal policies and regulatory requirements, reducing risks of non-compliance.
• Performance evaluation of suppliers: Historical data helps assess supplier reliability, on-time delivery rates, and quality consistency.
• Future procurement planning: Reviewing past procurement patterns helps optimize sourcing strategies, negotiate better contracts, and improve cost efficiency.

Organizations should maintain digital records of:

• Purchase requisitions and approvals Track all procurement requests and their authorization status.
• Supplier agreements and contracts: Store contractual terms, pricing details, and service-level agreements (SLAs).
• Invoices and payments: Keep a record of all financial transactions for budget analysis and audit trails.
• Delivery receipts and quality inspection reports: Document product quality and ensure adherence to specifications.

Many organizations now use cloud-based procurement management systems to securely store and access procurement data in real-time. These systems enhance accessibility, reduce paperwork, and enable seamless data retrieval for reporting and decision-making.

Tip: Implement a cloud-based procurement management system to store and retrieve procurement data effortlessly.

Also Read: Essential Procurement KPIs & Metrics to Measure in 2025

How Can akirolabs Help With Procurement?

akirolabs transforms procurement from a routine task into a strategic powerhouse that drives efficiency, sustainability, innovation, and procurement process improvement. Our platform equips you with the right tools and insights to modernize processes, improve decision-making, and align procurement with business goals.

Here’s how akirolabs empowers Procurement Strategy:

• AI-Powered Market Intelligence: This is a core feature. The platform integrates advanced web crawling and data analytics. With access to real-time data, you can stay ahead of market trends and adjust your strategies accordingly. With akiroAssist, our strategic co-pilot, you can access personalized guidance, analyze strategies precisely, and make data-driven decisions.
• Centralized Hub: akirolabs serves as a single source of truth for procurement intelligence, eliminating disconnected spreadsheets and PowerPoints; Stores historical category strategies, supplier data, and past decisions to ensure knowledge retention and continuous learning
• Strategic Scenario Modeling: akirolabs replaces outdated demand-supply matrices (e.g., Kraljic Matrix) with dynamic scenario modeling, enabling procurement teams to simulate and compare multiple sourcing strategies
• Measure Your Progress: Use simple reports on the platform to show and communicate how well you reach your goals.
• Actionable Strategies: Develop tailored strategies to streamline your processes, align purchasing decisions with your company’s goals, and thrive in an increasingly complex business environment.

akirolabs is here to help you transform procurement into a strategic function that drives innovation, efficiency, and sustainability.

Conclusion

Procurement in 2025 is no longer just about cost-cutting—it’s about efficiency, agility, and strategic growth. Businesses that refine their procurement workflows—from need identification to supplier evaluation, contract management, and payment processing—can unlock greater cost savings, mitigate risks, and improve supplier relationships.

By utilizing AI-driven solutions like akirolabs, you can automate tedious processes, gain real-time insights, and future-proof your procurement strategy. The right tools don’t just streamline operations—they turn procurement into a competitive advantage.

It’s time to take procurement to the next level. Start implementing these best practices today and explore how akirolabs can help you drive efficiency, innovation, and long-term success. 

Book a demo now and transform your procurement for 2025!