Rise of the lazy buyer
Posted on 6th March 2018 at 08:32
Rise of the lazy buyer
A lazy buyer is someone not willing to work to process or use any effort to complete objectives in his or her role. With Europe leading the way on internet usage by a staggering 76% of the population online (report by Global internet report 2016), the internet has opened a shop window to a global supplier base, making it easier to locate required products from cheaper sources.
Has this increase also given rise to the lazy buyer?
It is extremely easy to find that new product, item or raw material on page one of the search engine result so what’s the problem?
Well, over the past 5 years I have helped many companies improve their procurement processes and procedures and have personally witnessed a rise in this behaviour and I can give you three reasons why being a lazy buyer could cause you and/or your organisation issues that will cost time and money to resolve.
Due diligence - Due diligence represents several activities that should be undertaken prior to entering a contractual agreement. Due diligence has also been institutionalised as one of the six key principles of the Bribery Act of 2010. Every organisation should have due diligence policies and procedures for the procurement department to follow
Having missed this step entirely you & your organisation may have breached the Bribery Act of 2010. As well as the act there are many other reasons why some due diligence is well worth doing; Does the company even exist, have they the correct experience, do they have financial stability.
Case study - A company was having supply issues of products from a certain web-based supplier, they had been using this certain company due to the cheap prices. On investigation the company/website was operating out of his parents garage and had financial difficulty so could not support large orders even though payment was made upfront.
Terms & Conditions – The terms & conditions (T&Cs) are an integral part of an agreement or contract. Recent research has found that only 7% read the online terms and conditions when signing up for products and services and failing to check the small print puts you in the dark about your rights, until something goes wrong.
This is a growing issue and is highlighted in an experiment run by two communications professors Jonathan Obar of York University in Toronto and Anne Oeldorf-Hirsch of the University of Connecticut, where 75% of students signed up to NameDrop, a new social network. But according to paragraph 2.3.1 of the terms of service, they’d agreed to give NameDrop their future first-born child.
Apart from the above social experiment there are very serious implications to blindly signing up including; latent defects, limited liability, delivery expectations & the governing law.
Case study – A company was sending all their parcels via an internet courier service and had been using this service for three years. On investigation they where paying around 14% more than expected but advised their rates had not changed. The company had blindly signed up to yearly % increases which gave the supplier full right to increase within the invoice without changing the published rates.
Compliance – CE, REACH, ROHS et al - established standards, goods, services and/or processes are required to adhere to the specified requirements of your industry, however buying over the web does not provide you with the assurance that the supplier has achieved said certification. When procuring from countries outside the EU, simply CE certification cannot be a guarantee. If you are not sure what items should have the CE mark, see link
Case study – A company searched for a new cheaper power supply from a far Eastern country to reduce cost. The product advised it was CE tested and was duly received with labels. The product was found to be faulty & after investigation was not CE tested and could have caused severe damage.
So, you maybe wondering what can be done to avoid such potential problems. A well-trained buyer/purchaser/procurement professional will know that this is not good process, but SMEs don’t always have the luxury of this experience and often utilize any available resource within the company for this responsibility.
Pro Outsourcing have a proven track record of helping our clients to not only conduct global sourcing projects but to also perform contract reviews on their tail-end spend and improve supplier performance through focused supplier relationship management. We can help you avoid getting it wrong.
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