Many e-commerce businesses will start the process of creating forecasts and budgets for the new year around this period. As a purchaser, you may be heavily involved in this process already. Alternatively, you may be provided with a budget in December that restrains what you can buy and when. If the budget is insufficient or does not account for seasonality, this could pose a problem next year when you cannot purchase the stock you need. In this blog, you can read more about the importance of procurement planning. Find five reasons why you should set up a procurement plan and what can happen when you are not involved in the financial budgeting process.

What is a procurement plan?

Procurement planning is the strategic approach that will feed your conversations and budget negotiations with finance and management teams. As a purchaser, you will still produce a detailed plan of what to buy and when but it will be guided by the strategic decisions made in procurement planning rather than what you can see in the warehouse. It incorporates expected seasonality, and up-front supplier choices based on which are the more reliable suppliers and who can offer the best prices.

Procurement Plan and Budgeting Image

The procurement planning process guides decision-making in your purchasing operations. The procurement plan spans a short period (usually one year) and includes the following elements:


  • Analysis of the current purchasing situation – make sure you can analyse the performance of your products, for example, with the help of a data-driven purchasing tool.
  • Budget – the budget sets out the purchasing spending for a certain period.
  • Implement the purchasing strategy – build a detailed plan of what to purchase, when, from which suppliers and at what price.
  • Roles and responsibilities – document the responsibilities of all people involved in the purchasing operations within your business.

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What are the pitfalls of operating without a procurement plan?

In businesses, a procurement plan is – understandably – not everyone’s main priority. Especially, just after the inception of your business or in the first couple of years while growing the purchasing process is likely to be ad hoc and dependent on available funds at a point in time. However, when you grow bigger and want to scale up your operations the procurement plan is essential to ensure that you take proactive control of the amount of budget available for stock. Pitfalls of operating without a proper plan:


  • Incorrect purchasing decisions can lead to excess stock and tied-up cash
  • You do not have the money to buy products when you need them
  • Difficult to collaborate well with other stakeholders within the business
  • Risk of last-minute stockouts due to ad-hoc purchasing
  • Harder to build up a good relationship with your suppliers as you cannot commit in advance to spending levels

5 reasons why an e-commerce purchaser should spend time on creating a procurement plan

The procurement plan improves efficiency and interaction with the other business departments. Find below five reasons why you should spend your time as a purchaser working on a procurement plan and getting involved in budgeting.

1. Manage spending per period in a year

The procurement plan allows you to manage your spending as a purchasing department. If you plan and create a budget you can use that as your reference when purchasing. Working with a budget gives you as a purchaser clear guidelines.

2. Improve collaboration with other departments

Especially the collaboration with the finance and management teams will improve if you work with a procurement plan. The budget within the plan allows the finance team to manage and control spending and feeds the conversations between the two teams.

3. Improve collaboration with your suppliers

Planning makes it possible to invest in the relationship with your most important suppliers. If you can give them an indication of your purchases for a certain period, you will allow them to get organised and arrange things higher up in the supply chain.

4. Scale up your purchasing operations

Do you want to make your purchasing operations more sustainable? And do you want to scale up? Focus more on automation and adding data-driven solutions to scale up your operations. By making your purchasing process less time-consuming and manual-driven you gain time to work on a procurement plan and be involved in the budgeting process.

5. Set clear procurement goals

By integrating your purchasing strategy into the procurement plan, you can link the strategy to clear goals. Set KPIs to measure the performance of your products and/or purchasing decisions and update your plan accordingly to the results.

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Plan and prepare your business for growth

The procurement plan should be a part of your purchasing operations that you update on a yearly – or periodic – basis. Especially after the Summer, when you have over half a year of data, it is a good moment to start planning – not only for the busy months left in the year but also for the next year. Accurate data from a data-driven purchasing module gives you insight into the performance of your products, your purchasing decisions and your forecasts. Use the data in your favour for your procurement plan.

As well, use the procurement plan to incentivise your relationship with internal and external stakeholders. If you do not go to Finance or Management with a plan of what you want to spend and when you may find that funds are not available. Additionally, it proves effective to improve your relationship with your suppliers as you can inform them ahead of time of your planned purchases, allowing them to get organised and you to negotiate the best prices.


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