Keeping The Risk On Suppliers

PurchTips edition #29

 

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Have You Used These Techniques To Manage Risk?

When contemplating the purchase of a new product or service or doing business with a new supplier, you face risk. Many bad things could happen, including:

  • The product or service could be of unacceptable quality
  • The supplier could fail to perform
  • The supplier may go out of business

There are consequences if these things happen. Your organization could lose money. Your organization may fall behind on its schedule. Your reputation as an excellent purchaser could be tarnished.

As an agent of your organization, you must take steps to protect your organization from this risk. While risk management is a topic that is way too extensive to comprehensively cover in a one-page article, here are a few tips for managing risk when dealing with a new product, service, or supplier:

1. Get A Sample Before Making A Long-Term Commitment

If you're buying a product, ask for a low- or no-cost returnable sample of the product so that your organization may assess its quality. If you're buying a service, have the service performed on a one-time basis for the same reason. There is no better proof that a product or service will suit your needs.

2. Ask For A Money-Back Guarantee

You shouldn't lose money if you are not satisfied. Ask for a money-back guarantee. If the supplier declines, you're probably best not doing business with that supplier. After all, why should you have the confidence in the supplier's product or service when the supplier doesn't? If the supplier offers the guarantee, the load on your shoulders is much lighter.

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Are you a procurement leader whose team isn't achieving the results you know are possible? Maybe it's not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.

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Are You Getting The Most Out of Your NLPA Membership?

Members of the NLPA get more than just articles like this by email. As a member, you also get access to:

  • The Procurement Training & Certification Starter Kit
  • The latest Purchasing & Supply Management Salaries Report
  • Leading-Edge Supply Management™ magazine
  • Members-only webinars 10x per year
  • And more!

If you haven't been taking advantage of these benefits, why not log in and start now?

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