How To “Get Lucky” In Procurement
How Can You Make Procurement Skill Feel Like Luck?
PurchTips Edition #371
At this time of year when St. Patrick’s Day is celebrated, a lot of talk includes the word “luck” or “lucky,” as in “Luck O’ The Irish.” In procurement, an internal customer may feel lucky if s/he places an order, receives the correct product/service, on-time, backed by strong service and warranty, with favorable payment terms, and for the lowest price available. Seasoned procurement professionals know that it takes skill – not luck – for that to happen consistently. But, internal customers can get that lucky feeling if you apply these four principles to products/services ordered by decentralized staff:
- Enter Into Enterprise-Wide Contracts With Great Suppliers. The degree of ability to have internal customers’ requirements met is mostly dependent upon the quality of the suppliers with whom orders are placed. Your sourcing projects should identify the suppliers that fit your organization’s needs best. With those suppliers, you should establish enterprise-wide contracts with obligations to meet your internal customers’ clearly articulated needs.
- Establish “Standard” Products/Services. A supplier’s ability to provide lowest cost and maximum product/service availability is highly dependent upon minimal unnecessary variations. It may be unprofitable – even impossible – for a supplier to have 40 variations of an item available for next-day delivery. But if you have an enterprise-wide standard of just one or two variations, you improve your buying power and your supplier’s ability to manage availability.
- Set Up Foolproof Procurement Processes & Policies. Internal customers need to easily know what to buy, from whom to buy it, and how to buy it properly. That’s not as easy as it sounds, especially if the procurement process isn’t well-defined and/or if there is no mandate to use a certain process. Using today’s procure-to-pay technology, and having a corporate mandate to use it, can guide internal customers to do things the “right” way with minimal friction.
- Support Your Processes With Top-Notch Communication. The world’s best procurement process has no value if internal customers don’t know that they are supposed to follow it. Make sure that you communicate so well that “I didn’t know I was supposed to do that” is never an internal customer’s reason for an unlucky procurement experience.
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