This week Shaz shares a couple insights on a couple of the best practices he’s seen put into play that have transformed businesses. Check out this week’s insight on the importance of proper documentation and supplier/ buyer partnerships.
What are a few of the best practices you have seen our clients adopt that have transformed their business?
No PO, No Pay
“One thing you are seeing a lot of today is the No PO, No Pay philosophy. So, people are putting a lot more emphasis on the necessity of proper purchasing practices. Companies are taking their requests for purchases, non-payroll purchases, and suggesting – “If you are not going to actually get a PO (purchase order) for this and send it to a supplier, we are not going to pay that supplier for their services when we get an invoice.”
“What happens is you end up with a black hole. If there is no PO referencing an invoice, how do I know that this invoice is legitimate? How do I know that it went through a strategic sourcing process and approval cycle. In this situation, the company has to actually process everything on the downstream end, which becomes very expensive. Now, they have to play the game of rabbit. Let me go catch the rabbit! I don’t know where this invoice came from. I think the No PO, No Pay philosophy is huge in refining the procurement process.
Electronic Communication & Collaboration with Suppliers
“I also think that a lot of customers are getting smarter on how to integrate with the supplier, so when you look at companies that have 80% of their spend with a very few, select handful of suppliers. Those handful of suppliers have an opportunity to provide a service for the company, which in turn provides benefits for the suppliers. To enhance this partnership, suppliers are saying, “can I electronically communicate with this buying organization? And in turn, can the buying organization electronically communicate with me?”
“This is the reality of purchasing today. Supplier relationships are partnerships and the infrastructure has to be in place to allow for electronic collaboration and communication between the buyer and supplier.”