May 9, 2013
We’re going back to basics with this post. I meet non-procurement specialists with procurement responsibilities that just need a ‘nudge’. SM readers should find this list helpful when advising their non-procurement’ colleagues. To set up and manage supplier (vendor or contractor) engagements is tough for some people who are outside procurement (which is why they need us) – especially because some suppliers are much better at bidding than they are at delivering the contract.
How do they get the core information they need to ensure a successful supplier engagement? Here’s a simple but incredibly effective checklist I recommend to our clients. These 10 simple questions will improve your colleagues’ approach to supplier engagements. Misaligned expectations are the number one cause of commercial disputes. (more…)
March 4, 2013
Some of the most difficult negotiations with suppliers involve open book accounting.
The concept is now widely known, but ensuring suppliers will be receptive to making open book accounting a contractual reality is another matter. Historically, a supplier’s pricing decisions may have been steeped in mystery and the detail of a price confidential. It is logical for a buyer to want to probe the cost drivers, including labour, materials, overheads, profit and the contingency provision. (more…)
February 7, 2013
The economic climate dictates it is time for procurement departments to re-examine their approach to the use of price indexation formulae.
Personal experience indicates in the UK there is an extensive use of the Retail Prices Index (RPI) and Consumer Price Index (CPI). These are produced by the Office for National Statistics (ONS). The main differences between the RPI and CPI relate to: (more…)
January 9, 2013
Are you are going to monitor suppliers’ financial positions more diligently in 2013?
Knowing the position at the time of annual reports is no longer enough, given the incidence of financial failures. Should it not be a strategic role for procurement to undertake detailed monitoring of a supplier’s finances – demanding commercial acumen, not just reading a profit and loss statement and balance sheet? (more…)
December 6, 2012
How do buyers and suppliers ensure the same direction, or ‘goal congruence’, which seems to be the expression of the day, in tendering for contracts?
A UK Audit Commission report a decade ago cited six key reasons for ineffective procurement: (more…)
November 26, 2012
Businesses and public sector organisations want to work with buyers and suppliers with as little dispute as possible. A key requirement is clarity of terms used in discussions and documents relating to trading relationship and contractual agreements. Ultimately, there needs to be sufficient clarity to enable a judge to enforce their agreement – in the worst case scenario. (more…)