The Procurement Glossary » Procurement Planning

Procurement Planning

Strategy & Operations

Definition

The process of forecasting needs and scheduling sourcing activity to meet them on time and on budget.

Explanation

Planning aligns upcoming demand, contract renewals and market timing into a sourcing calendar, so tenders start early enough and contracts are in place before they are needed. It prevents rushed, uncompetitive buying and last-minute renewals.

Example

The annual procurement plan schedules each major tender months ahead of the current contract's expiry.

Related terms

• Demand Forecasting — Predicting future demand for goods to guide purchasing, inventory and production planning.
• Category Strategy — A plan for how a business will source and manage a specific spend category to maximise value and manage risk.
• Auto-Renewal Clause — A contract term that automatically extends the agreement for a further period unless a party gives notice to cancel by a deadline.
• Demand Management — Influencing what and how much the business buys — challenging need, standardising specs and curbing over-consumption — to reduce spend at the source.

Related concepts

• Source-to-Pay (S2P) — The widest procurement cycle — sourcing and supplier selection on top of the operational procure-to-pay buying process.

Frequently Asked Questions

What is Procurement Planning?

The process of forecasting needs and scheduling sourcing activity to meet them on time and on budget. Planning aligns upcoming demand, contract renewals and market timing into a sourcing calendar, so tenders start early enough and contracts are in place before they are needed. It prevents rushed, uncompetitive buying and last-minute renewals.

Can you give an example of Procurement Planning?

The annual procurement plan schedules each major tender months ahead of the current contract's expiry.

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