How To Improve Procurement Compliance - NLPA

 
 
 

How To Improve Procurement Compliance

PurchTips edition #296

 

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Are You Getting Maximum Procurement Compliance?

Unfortunately, procurement professionals make common mistakes when sourcing a category previously sourced by internal customers. As a result, compliance with procurement initiatives suffers and prevents the organization from reaching its cost savings potential. Here are four tips for getting better compliance from internal customers.

  1. Have internal customers on the supplier selection team. When a procurement department comes in and says that it is going to take charge of buying decisions previously made by internal customers, their resistance is natural. They feel like you are taking their power away. While your involvement is necessary, that doesn't mean that your internal customers should be left out of the decision. Have them on your supplier selection team so that they have a voice in the decision. They are more likely to support a decision they were involved in making.
  2. Factor internal customers' interests into supplier selection criteria. Internal customers often think that procurement departments only consider price in their decisions. Internal customers often have more knowledge of how suppliers' performance impacts the organization, so get their input on the criticality of quality, delivery, service and the like. Then, integrate those interests into the supplier selection criteria with appropriate weightings.
  3. Explain to internal customers the procurement practices they will follow as part of the supplier selection team and why. Your ability to achieve great negotiation results can be limited, if not completely undermined, if suppliers are allowed to speak to others in the organization. But when internal customers are simply told that they are "not allowed to talk to suppliers" without any rationale, they feel untrusted and may not comply. So, educate them about how some suppliers use "dirty tricks" to unethically extract competitive information from unsuspecting non-procurement staff. Discuss the benefits to the organization of "speaking with one voice" during negotiations.

See the 4th tip on my blog: http://tinyurl.com/mrfczug

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