Thursday 12 July 2012

The cost of getting purchasing wrong

The hardest task I and my procurement and purchasing colleagues have is convincing our stakeholders and other managers of the positive benefit to the business of applying more rigour to how they purchase. The skills I have developed over 27 years are seemingly discounted with a belief that goes something like "anyone can purchase" or as someone said the other day "it's just shopping."

Until it goes wrong that is when the realisation starts to dawn that we might have helped them avoid the hole they're now in.

How we get around the problem I really don't know - we've been trying for so long and yet the profession doesn't really seem any more well recognised than when I started, other than in the larger corporates.

So here's how I'm going to try........ I've set up a Pinterest board and when I find examples of the impact of purchasing gone wrong I'll add to it. That way we'll all have an expanding visual reminder of what effective purchasing can help businesses avoid.

Today I've added examples of buyers going to jail, project overspend, contract termination, accusations of wrong doing in the media, delays, cancellation costs, ministers apologising on your behalf and complete service failure! And that's just been in the media over recent weeks! oh yes and one company's share price slumped due the cost implications of a product recall.

The most bizarre decision made of the examples found so far has to go to one authority who felt it acceptable to claim a deduction of £84,450 for a mousse that was 24 hours out of date. No wonder the court upheld the ability of the supplier to terminate on the grounds of breech of contract. Just think though of the cost to the business of retendering - one reason for getting it right first time I'd suggest.

Alison Smith
The Purchasing Coach
Sowing the seeds of effective purchasing in your business

Share price picture Source: via Alison on Pinterest

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