When you’re dealing with vendors and suppliers there are plenty of opportunities for errors and miscommunication, but with a little diligence there are ways to avoid at least some of the issues that cause procurement experts to wake up in a cold sweat.
We’ve all heard of procurement misunderstandings. Someone thinks 50 bottles of water were ordered when 50 cases were actually ordered. Or the supplier brings 100 hats when 100 bats were needed. Misunderstandings happen frequently in procurement, which is why the best thing to do is make sure that any order is in writing. If you sense anyone has misunderstood the agreement, ask for clarification immediately.
Sometimes the worst case scenario happens: someone violates the procurement agreement. Maybe the proper item was delivered, but at a much higher price than agreed upon, or it was delivered a week later than promised. Disputes are rarely fun and when two sides can’t agree on the terms, there’s the possibility for larger problems. Buyers and suppliers can protect themselves by using purchase orders to keep track of exactly what was ordered, when it was due, and what the price was. Even if this hasn’t been an issue in the past, there’s a chance something could happen in the future that makes you wish you had a process.
- Duplication of Procurement Efforts
This might not be a big problem in smaller companies, but in large companies with a variety of departments, duplication can cost significant time and money. With too many departments responsible for procurement, it can be impossible for the company to obtain volume discount pricing. Worse, if the departments use different names for the same vendor there can be confusion about what has been ordered from which vendor. Centralizing procurement saves on duplication efforts, eliminates confusion, and allows one person or department a full view of what the entire company is doing.
- Breach of Brand
Every so often, we hear stories about companies with a strong corporate identity caught doing business with a vendor that violates that identity. If your company markets itself as being against animal testing, then procuring products from companies involved in harming animals won’t sit well with your customers. The more heavily you rely on your brand as a marketing strategy, the more firm you have to be with procuring from companies that complement your brand. That means doing research into all potential suppliers and vendors to ensure their priorities mesh with yours.
- Procuring Unusable Items
We all know employees who have been frustrated by well-meaning employers who purchased items that didn’t work. Small-scale items, like a stapler that’s the wrong size, might not cost a company much, but procuring a computer system that isn’t compatible with the company’s own computers wastes time and money. When procuring an item, no matter who it’s for, talk to the people who will be using it and ask them some important questions.