We are often genuinely delighted when we perceive something has exceeded our expectations. Is that because over time we have been conditioned to expect things never to be quite right?

If we are honest we can all think of occasions when personally or professionally something hasn’t gone quite to plan. If that event involves buying or selling something then perhaps this has also resulted in a dispute over costs, poor service, negligence, product quality or delays resulting in critical deadlines being missed. In most instances everyone genuinely wants to do a good job so perhaps we let ourselves down when we don’t adequately identify potential problems (the risks) or adequately consider, then mitigate for the possibility of failure. Surely it’s better to do that than to risk the chance or perhaps the cost of getting it wrong.

Whether we like it or not purchasing and supply is a complicated matter. At the heart, of course, it is offer and acceptance. However, when transaction ideas, expectations or concerns have not been adequately communicated and agreed (preferably in writing) things can and do fall apart. When negotiating consider any third parties, look for possible hidden costs, identify any assumptions, then act accordingly to mitigate those risks. If you’re unsure about anything, seek professional assistance. From experience, if one party doesn’t want to agree in writing then that should set off alarm bells. To avoid confusion, terms and conditions should be communicated and agreed up front.

Some key words floating around today are organisational visibility, transparency and informed decision making. These are collectively aimed at managing business risk, encouraging openness and ensuring certain precautions are upheld, therefore providing guidelines around your businesses purchasing and supply management processes should be an essential objective for management. This ultimately provides the business with clarity and a definitive set of expectations and non negotiable requirements. Unfortunately, so many businesses leave this to chance relying solely on the untested skills of certain individuals. It’s not until something goes wrong that there is an investigation and then it is often too late.

Being in business means there are certain rules such as the legal requirements of directors, accountability and audit ability. Therefore the framework for these should be a set of non-negotiable operational requirements that all staff involved in any form of purchasing or supply are aware of and conform to. There are no circumstances in which it is allowable to consciously or knowingly risk breaking the law, therefore business has a responsibility to ensure a framework that supports its expectations for purchasing and supply that is regularly reviewed and maintained.

Things to consider are:

Everyone involved in an organisation’s purchasing process are expected to know the limits of their authority. The organisation should provide a clear framework for escalation and timely decision making and these need to support the supply-chain functions of the business. Caution should always be exercised before entering into any agreement that could ultimately injure or cause harm to your business. Don’t ignore the warning signs and risk things spinning out of control; remember harm is not always financial. Purchasing and supply (buying and selling) goes on everyday and whilst the act itself can be a complicated matter it doesn’t have to be if we are prepared to invest a bit of time and effort, ensuring the right organisational framework that supports the desired business purchasing and supply management processes.

Vendor Management is proud to be a leading provider of supplier performance management services. Further to this article, please take a few minutes to view our website www.vendormanagement.co.nz and see how Vendor Management can help optimise your business’ outsourced supplier engagements, reduce commercial risk, reduce saving leakage and up skill staff. Call us today on NZ 0800 464844 and ask us about our RISK FREE services.
Cathy has more than 20 years of experience across a wide range of disciplines including Service Delivery, FMCG, IT, Banking and Telecommunications having worked with major New Zealand and dominant global organisations. Outsource management, cost saving and contract management strategies are areas she is both professionally and personally passionate about.
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