We’ve talked a bit about sweaters and cars, but now let’s consider expanding our product offerings into something more delicious—cookies! So, how would we go about doing that?

Planning

Set Requirements (What Do We Care About?)
Since monk fruit is all the rage, we’ll need to incorporate that into our cookies. Of course, we’ll also need the basics like chocolate chips, flour, eggs, and other essential ingredients.

Estimate Sales
We need to estimate how many cookies we think we’ll sell so we can order the right amount of ingredients.

Aligning With Stakeholders

Thankfully, it’s not just up to us to make the decision. We’ll get multiple perspectives from various teams involved in the process:

• Quality Assurance (QA): Advise on regulatory standards, production requirements, and the necessary ingredients.
• Finance: Ensures we stay within budget.
• Procurement: Finding the right ingredients at the best price.

The procurement team plays an especially crucial part in making sure everything comes together.

Procurement’s Role

• Step one: Find the a) right ingredients b) at a competitive price.
• Step two: Ensure the ingredients arrive on time.

1. Request for Quote (RFQ)

To find the right ingredients we’ll send suppliers a detailed list of what we’re looking for.

• Ingredient specifications.
• Packaging needs.
• Delivery schedule and location.
• Quality and compliance regulations (think ISO for packaging materials).
• Price per unit.
• Lead times (how long it’ll take to receive the ingredients).
• Sustainability practices.
• Past performance for reference.

Hopefully, we already have an RFQ template ready to go, which we can fill in and send to suppliers like Sarah at Imperial Sugar in Texas, as well as others we’ve researched online.

2. Reviewing Supplier Responses

Once we send out the RFQs, there will likely be a spreadsheet or ERP system (Enterprise Resource Planning) tracking which suppliers have responded, what their quotes are, and any relevant details.

We’ll review their quotes to make sure they meet our requirements – only the best monk fruit! -verify their certifications, checking validity dates one by one, evaluating the cost and lead times, etc.

3. Negotiating with Suppliers

If everything checks out, it’s time to negotiate long-term agreements with our suppliers to lock in prices and secure reliable delivery terms.

4. Issuing a Purchase Order (PO)

Once the agreements are in place, we issue a formal Purchase Order (PO) and contract to the suppliers. Let’s make the deal!

5. Supplier Onboarding

The final step is to onboard the supplier, which is a discussion for another time!

The procurement team is managing a lot already so having to do the below, adds up:

• Manually search for suppliers
• Compile an RFQ
• Manually follow up with suppliers
• Input bid information into their system
• Manually check the certifications to ensure the dates are valid
• Negotiate
• Create a PO