Purchasing Best Practices: Ten Keys To Effective Purchasing

1. Improve your vendor relationships
 
• Collaborate to reduce costs
• Order in a manner so as to keep vendor's costs low
• Focus on overall total cost
 
2. Develop a scorecard to keep track of your vendors' performance
 
• Track quality, service, and price performance
• share this information with your vendors
 
3. Get the right information so that your efforts are well spent
 
• Determine your purchasing volume so you can leverage your spend
• Collaborate with internal colleagues to identify spend that can be improved
 
4. Develop a talented purchasing staff
 
• Hire people with the potential to grow
• Provide training in negotiation techniques, analytical techniques and contracts
• Open lines of communication from the top down as well as laterally
 
5. Get executive buy-in
 
• The top purchasing executive should report directly to the CEO, CFO, or COO
• Top officials must have a direct line to purchasing 
 
6. Enforce preferred vendors
 
• This will help keep the vendor list under control
• Preferred vendors will change as business needs evolve; buyers will need to put personal preferences aside
 
7. Lead centrally, implement locally
 
• Spend data must be collected and analyzed centrally
• Local teams need to determine needs and help select suppliers
• Implementation is done locally, so buy-in is important
 
8. Develop strong negotiation skills
 
• Avoid Evergreen Clauses
• Always get your needs, and some of your wants
 
9. Leverage technology to your advantage
 
• Automate as much as possible
• Leverage your systems to collect spend data
• Use e-mail over fax or phone when possible
 
10. Design incentive programs that incentivize employees and profit the company
 
• What gets rewarded is what gets done

Adapted from: Purchasing - Best Practices: Ten Keys to Effective Purchasing http://bit.ly/digXn0