Now you can control that by ensuring that your decision-makers behave in an ethical way. We talked about how vendors can try to influence the decision by engaging in unacceptable behavior. What is acceptable and what is not acceptable.If potential vendors want to reach out to talk about their capabilities, how they should engage? If there is no purchasing policy, there are no guidelines for your suppliers.įollowing are some of the areas where a purchasing policy can help Purchasing policy is not just for your employees but it also provides standard guidelines for your suppliers on how to engage with your company. If you are using a purchasing system then a purchasing policy can help drive adoption for that system. However, by setting up a purchasing policy, you are letting employees know about the role of purchasing and how to engage with purchasing.Ī purchasing policy also helps you establish and communicate a standard purchasing process for the company. Just defining the role of purchasing will not help increase procurement engagement with stakeholders. If you do have a purchasing department, then a purchasing policy helps you elevate the value of the procurement department. Schedule a call with our process specialist and we will show you how to implement and automate an effective purchase approval process to capture non-compliant purchases. The point is that no matter what is acceptable and what is not acceptable, having a common standard across the board helps employees to make their day-to-day purchasing decisions.Īlong with a purchasing policy, you could implement a purchase approval process to mitigate unauthorized purchases or purchases from non-preferred vendors. Is that acceptable behavior in your company? You should not be surprised that the vendor is selected for that product or service. Let’s say the vendor takes the decision-maker to Vegas for a trip just before the purchasing decision is made. It is not uncommon for vendors to entertain the decision-makers during the evaluation process or after they are selected as a vendor. If the decision-maker in that department decides to make a purchase from a friend or relative, Is that acceptable within your company, or is that considered a conflict of interest? Example 2 – Personal incentives for the buyer That means purchasing is done within individual departments. If you don’t have a purchasing policy, you probably don’t have a dedicated procurement department. Let’s look at some examples Example 1 – conflict of interest These are your purchasing commandments for your employees. Having a purchasing policy from the start allows you to establish a standard set of guidelines across the different locations.Īs you scale the operations, you can update the purchasing policy to accommodate any specific requirements for a location or department. If you don’t set up a purchasing policy from the beginning, every department evolves with its own set of processes.Īs the company continues to grow, these individual policies become the new norm, and it becomes difficult if not impossible, to consolidate these into one cohesive policy. However, as the company grows from a few employees to a large number of employees or to multiple locations, this approach doesn’t work. So you already have shared norms and you probably don’t need a written policy. When you are a small company, purchasing is performed by very few employees. Purchasing policy removes the ambiguity around purchasing products and services from your vendors. What is the role of the purchasing policy?Īfter working with 100’s of companies, we have noticed the following benefits for companies Standard Guidelines Then follow this guide and design a purchasing policy for your business. This guide is for controllers and CFO’s who are looking to control costs and get better cash flow visibility through an effective purchasing process.īefore we get started, download our purchasing policy template by clicking the link below. In this step-by-step guide, we will walk you through the key elements of purchasing policy and how to write a highly effective purchasing policy. Then this strategy would help you implement a purchasing policy that not only helps control cost but also helps with setting up your company procurement process for growth. Looking to control cost and get better cash flow visibility? Are you looking to implement a new purchasing policy? Bonus Material: Free Purchasing Policy Template
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