Sep
16
Purchasing requisition process
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The first key step of the purchasing process – is the identification of need – as we stated in our purchasing process video, typically this comes in two forms
1/ An internal request based on a requisition form
2/ A “buy” signal generated from the companies ERP/MRP system
Companies typically employ a purchase requisition process to “manage” these buy signals – allowing requests to be documented/tracked whilst following an appropriate approvals workflow. It’s important to differentiate this step in the buying process from raising an order – Purchase requisitions are not purchase orders and do not form a contract with a supplier for materials or commit money.
What actually triggers a purchasing requirement?
There can be various reasons for a company needing to buy something this could come from
• Materials needed for the manufacturing process
• Parts that are required to sell on to customers
• Safety stock
• Internal use / development needs
• New employees (e.g. requirements for IT equipment or office furniture)
Indeed –the signal to “go and buy” can come from almost anywhere (from requests for pens to requests for heavy machinery).
What is included in the Purchase requisition?
Whilst many requisitions simply state the product – depending on the end usage a requisition might need to be accompanied by various information from a technical specification to a concept to assist the buyer when seeking price and availability enquiries.
A purchase requisition will usually include key information such as
• What part/product is required
• How much of the part is needed
• When is it required by
Supplier selection
Whilst it is normally the role of the buyer to select the supplier that will be used – there is often input into supplier selection as part of the requisition process for example the requisition may stipulate proprietary items or the product may come from a vendor catalogue. Whatever supplier information is presented as part of this phase – final supplier selection is normally a procurement function.
To authorize or not to authorize – that is the question
Once a need has been identified that doesn’t necessarily mean that the purchase will proceed – there is usually an authorization process that accompanies the requisition phase – this is often a line manager or someone that has budgetary responsibility – they will verify a number of things before approval – for example
1/ Do I have budget funds for this item
2/ Is it completely necessary that we purchase the item
3/ Are we buying the right item
4/ Are we buying enough of the item
Once enough information has been gathered on the requirement and it has been approved it will usually be forwarded to the buying department for action.
Sep
15
6 techniques to deal with a supplier that doesn’t deliver on time
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Suppliers that don’t deliver on time are part of the everyday business landscape – while we all strive for 100% OTIF (“On time in Full”) – it doesn’t always happen which means we are often left with some suppliers that don’t make the grade. Faced with this situation how should we deal with such suppliers? It’s easy to say we wont deal with them again but that’s not always possible so you need an action plan.
Here’s 6 techniques to help you deal with poorly performing suppliers
1/ Set clear expectations and consequences
Firstly ensure that you have established your expectation e.g.
• Did your supplier know when you expected delivery and had they agreed to that date?
• Did all parties understand the shipping terms/delivery requirements/ship to location?
• Did the supplier understand what (if anything) would happen if deliveries were late? (e.g. financial penalties etc)
2/ Be prepared to interrogate
Talk to your supplier – find out what went wrong – communication is key to understand the issues and to ensure you don’t suffer from them again – simply leaving it and hoping for the best next time could spell disaster
3/ Understand the route cause
Why did the supplier fail to deliver on time – was it manufacturing processes, failure to procure parts on time? Find out the key contributory factor. If your going to be using the supplier on a regular basis – understanding what went wrong and ensuring a fix is put in place is imperative.
4 / Provide feedback on performance
Regularly communicate out to your suppliers and tell them what you believe their delivery performance is (be prepared for some difference of opinion!) – ensure that as part of this communication you state what your expectation is.
5/ Be prepared to take criticism if your part of the problem
If you have process issues be prepared for your supplier to place some of the blame on you – try to put things into perspective – understanding the issues on ALL sides is crucial if your going to improve things – don’t expect the supplier take all the criticism if they are not entirely to blame – ensure that if you do have issues you have appropriate plans to fix them.
6/ Follow up
Have regular reviews – if you have a poorly performing supplier – and you have identified the issues – follow up regularly to ascertain what improvements are being made and how they are impacting results. Consider having periodic business reviews where you can assess the trends and tailor improvement activity accordingly.