When implemented correctly, compliance can have a tremendous impact on your business’s purchasing success. However, regulating company spend and managing rogue purchasing can be a daunting task for procurement professionals. These Do’s and Don’ts will help you keep your company on track for purchasing success.
Create Broad Pricing Programs
Creating broad pricing programs with suppliers ensures that an advantageous price is paid for items the first time that they are purchased. Seeing a bad price on an item, no matter how insignificant in the overall scheme of the category, can have a deleterious effect on compliance in many categories.
Monitor Non-compliant Spend and Communicate at a Site Level
Gathering regular data, tracking results against expectations, and seeking out patterns among non-compliant spend gives you the opportunity to create programs that fulfill unmet needs. You’ll also need to communicate with sites that are non-compliant to cover all your bases.
Create Category Councils and Manage Your Supplier Catalogs
Having a council that will periodically discuss changing program provides a line of sight into the supply chain that ensures suppliers are properly vetted, reliable, and deliver quality products on time. This along with continuously managing your supplier catalogs will bring new items into the fold.
Understand Your Internal Purchasing Systems
Implementing a punch-out catalog is one step towards greater compliance, but it may not have the impact you expect if that particular category has historically been purchased through email or phone calls. Truly understanding your internal purchasing systems and harnessing that technology get employees connected digitally to create a smooth user experience and more adoptions of your supplier program.
Utilize Technology to Push Compliance
You can tackle this “Do” at two levels. On a market level, internal IT resources can block specific websites from non-preferred suppliers, and ERP systems can be limited to only allow preferred suppliers with managed contracts. At an item level, supplier’s systems can be modified to block out of scope items, set up shopping lists for key items, and identify On Contract items to push compliance towards negotiated items.
Want to further understand compliance reporting? Read our blog on, Why Utilizing Compliance Reports Make a Difference
Don’t Limit Catalogs
Limiting the catalogs of your approved national suppliers will likely force a buyer to purchase the item they can’t find from an unapproved supplier at a higher price.
Don’t Create a System Where it is Hard to Buy
If your system makes it difficult to buy everything this is needed to run the business, buyers will have to go outside of the system. That means you don’t get information on what was purchased and can never adapt programs to meet those needs.
Don’t Constantly Re-source the Same Suppliers
Don’t get repetitive with your suppliers. Look to non-compliant spend and create solutions for those items rather than constantly haggling with the suppliers that are doing the best job in creating compliant programs for you.
Don’t Rely on the Supplier to Define Compliance
The supplier typically has different goals and expectations for success than you do. It’s important to state your expectations upfront whenever launching new implementations, but any compliance tracking should be done to make sure they are conforming to your company’s goals.
Don’t Rely on Soft / Anecdotal Data
Feedback from both sites/buyer/suppliers may be positive (“we have a great relationship”, “everything is running smooth”) but the hard data may reveal a different story. Often in instances where there is a great local relationship, the spend may still be a fraction of expectations. It is good to review the hard data and marry that with the soft data to understand if there is a technology issue or a misunderstanding of the program scope.
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