Are You A Purchase Order Mistake Waiting To Happen?

PO mistake-01Many businesses are well aware of the importance of their customer order management system and invest heavily in it to improve sales, their approach toward purchase order management is often more neglectful. Here are a few areas where a little TLC can bring about a huge difference:

Loyalty to Existing Suppliers and Ignoring Other Suppliers

It is an admirable goal to develop a long-term relationship with your suppliers, in fact it is encouraged by so many and they are essential to your business’s good health and growth. Obviously you have stuck by your supplier because they have a reputation for delivering quality and quality  increases customer satisfaction and decreases returns, they are always on time with deliveries and that is crucial to how customers view your reliability, they are always a step ahead of the competition based on their pricing and technological knowledge of industry trends. However, it is also the supplier’s responsibility to stay ahead. Point being it is not a sin to look elsewhere. It will keep current suppliers on their toes. Suppliers need to be consistent with what they offer and they need to earn your patriotism and not throw a tantrum when you go out for bids on their areas of supply. Also ignoring deals from other suppliers and not giving them a chance to show you what they can offer can cause them not to be bothered to ever attempt doing business with you. The day might come when you the purchaser need something from them and they might end up ignoring you!

Assuming That Supplier Offerings Are Equal to Their Competitors Except for Price.

We all know the saying about assumptions and whose mother it represents? Moral of the story? Never assume that what one supplier offers is the same as their competitor’s product. Most suppliers want their products and services that they provide to be unique and different to what their competitor offers. You should try to differentiate and understand those differences. Understand the culture, needs, and business goals of your organization and do your purchases according to that criteria. Quality should be the bulk of the purchasing decisions you make in order to get the best value, rather than the best price.

Not Taking Supplier’s’ Advice

If a supplier has any advice or suggestions on how you can achieve your business goals in a better or more cost-effective way, do give them an opportunity to do so. Your suppliers are an integral part of your product development, and your success. Use them to their fullest advantage. Have a brainstorm session and get their input about design, features, and characteristics of your products to get ahead of your competitors and create products that are fully functional and effective and improve your profit opportunities.

ASSUMING the Price is Right

Assuming the price you discussed during the bidding process is correctly reflected on the purchase order is a huge risk you take and can cost your business a substantial amount of money if you do not check. Your Purchase order is the final official document and form of communication between you and the supplier. Make sure that they did not add any surcharges and other costs that were not discussed during the negotiating and bidding process. Suppliers need to be micro managed in a certain sense. Repeat all conditions and terms related to the purchase.

Creatures of Habit

Doing things in the same predictable manner is comfortable. Asking people to change the way they operate or think is asking them to move outside their comfort zone. This type of attitude and reasoning is also the reason why so many businesses have lost huge amounts of money because they are set in their ways, unwilling to remain competitive in this quickly changing market.  They need to take a look at what’s going on in the industry and look for ways that can benefit their business. Upgrading technology is always a good place to start.

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