Remedies For Supplier Screw-ups, Part II

PurchTips edition #247

 

Click here for the printer-friendly version.

By Charles Dominick, SPSM, SPSM2, SPSM3

Picture of Charles Dominick, SPSM, SPSM2, SPSM3

What Remedies Do You Have With Product Suppliers?

When contracting with product suppliers, you should plan what will happen if products fail to comply with acceptance criteria. You can negotiate for a specific contractual remedy or the option to choose from a list of remedies at the time of failure.

In PurchTips edition #245 (http://tinyurl.com/6vcw2uv), we discussed two of the five remedies commonly used in such situations: replacement and supplier repair. Today, we'll cover two more: self-repair and refund.

To avoid disputes, you should contractually specify certain things for each remedy. Here are two checklists that correspond to the applicable contractual remedies.

If self-repair is your chosen option:

  • What technical guidelines must your organization following when repairing the product?
  • Will the supplier reimburse your organization for the labor spent on repairing the product?
  • If the supplier will reimburse your organization for its labor costs, what labor rate will be used to determine the amount of reimbursement?
  • If the supplier will reimburse your organization for labor costs, when will the reimbursement be due?
  • Will the supplier's warranty remain in effect?

If refund is your chosen option:

  • Do you need to return the defective product or can you simply dispose of it?
  • If you need to return the defective product, does the supplier need to receive the defective product prior to issuing your refund?
  • If you need to return the defective product, who pays for the shipping of the defective product?
  • How soon must the supplier provide your refund?
  • If you need to return the defective product and the refund timing depends on the supplier's receipt of the returned product, what shipping options (e.g., next day air, ground shipping, etc.) are acceptable for shipping the product back to the supplier?

Do You Want a More Rewarding Procurement Career?

Are you tired of not getting enough opportunities, respect, and money out of your procurement career? Well, guess what? Nothing will change unless you take action towards becoming a world-class procurement professional.

Earning your SPSM® Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM® Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!

Download

Need Better Performance From Your Procurement Team?

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.

You need a performance improvement plan that's easy to implement and quick to produce results. The NLPA can help.

Download our whitepaper "The Procurement Leader's Guide To A More Successful Team." You'll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.

Download

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?

LoginJoin