The start of a new year is a fine time to consider an overview of purchasing – if only for a sanity check. It’s time to dust off that old handbook, determine what is relevant and which practices can be replaced.
a) Purchasing policies and procedures: When was the last time these were updated? There should always be an assigned owner within the purchasing organisation to ensure they are current and reflect the corporations’ business practices. Purchasing would benefit from having a group meeting to review these: to provide collective input utilising expertise, and as an excellent opportunity to ensure that all grey areas are clarified.
The update of purchasing policies and procedures should be a mandatory objective.
b) Agreements and contract management: Gone are the days when paper is filed in a cabinet, but which department is responsible for maintaining agreements and contracts? In some organisations, agreements are stored in legal. However, purchasing is responsible for the purchase order contract and may also maintain a copy of the agreement along with the purchase order (the same applies for the insurance information for onsite work). While most purchase orders are emailed to the vendor with or without an electronic signature, agreements are still signed and countersigned and a copy retained by both parties. The questions of who owns the process, the location of the agreements, the location of the purchase orders, and in what format, are key.
Purchasing policies and procedures can also inform and direct how this is managed.
c) Document retention: Every company has a document retention policy on the storage life of documents. Document control in conjunction with legal will have a policy outlining the minimum retention requirements.
If in doubt, ask. There is no excuse for not knowing.
d) Multiple purchasing locations: If the organisation has multiple purchasing locations, doesn’t it make sense that everyone has the same access, knowledge base, and tools (including software and hardware)? Collaborate with other site directors to ensure information is shared, is comprehensive and circulated.
The direct benefit to the corporation becomes obvious once procedures and processes are in place and followed. Knowledge gaps are reduced and eliminated.
e) Priorities: Think about what is critical to the success of an organisation. Review the resources on hand, request input from within your organisation and develop a plan to support that focus. If the focus is cost savings, make sure that objective is supported and understood throughout the entire organisation.
Flexibility is key. The focus can remain unchanged but also change in priority.
f) Online purchasing: Many buyers are now responsible for purchasing products online. While some organisations are not allowed to go through outlets like eBAY or PayPal because of Terms and Conditions located on a vendor’s site, a buyer must be versed in reading the fine print and the impact that it may have on the corporation. EULA’s, SLA’s and user agreements are all important components of online buying.
Don’t ignore the fine print, and you won’t get stuck with goods you cannot afford or return.
We all know that purchasing is essential to any organisation and belonging to a group that functions at a high-level can be challenging and rewarding. Minimise risks, develop process improvements and be proactive in managing the foundation of the purchasing organisation because it will ultimately strengthen the corporation as a whole.
☛ Kathleen McCahill is a purchasing specialist in corporate purchasing at IDT