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During the tendering process, there can be absolutely no contact with the vendor without procurement. Procurement is responsible for the process and the end result, so it has to be driven and controlled by procurement. After contract is signed, it is end user's contract, business and budget, and they are free to use it. Procurement comes in when contract and vendor management issues arise (i.e. when there are problems with the delivery against contract or vendor itself).
Purchases are categorized, capital goods, re-sales, consumables and project purchases based on purchase objectives and purchase value. Do not encourage the end user to purchase capital, re-sale and projects; it should go through purchase department rather than end user
a) Control : All end users in each department started to purchase, how an organization can achieve their purchase objectives? Organization will lose it’s control over what to purchase, when to purchase and to whom to purchase. Other questions are, who will manage the purchase contracts, negotiation and supplier management. A department head need control over his team to achieve all above objectives.
b) Administrative cost : It will be very high compare to a centralized purchase department. Other cost may include returned material, damage or not ‘fit for purpose’ conditions.
c) Risk over the purchase : There is compliance risk, reputational risk, operational risk, strategic risk, financial risk and risk of corruption and unethical activities of individuals.
d) Purchase cost : It quite sure, end user purchase cost V/s department cost will be very high
e) Lost benefit over bulk purchase : The organization will lose its advantage over suppliers, bargaining, discount, credit facilities and so on...
f) Lack of skill, expertise and experience : End user may not be competent, skilled and experienced in purchasing compare to a purchase professional
On the other hand, departmental end users can buy consumables for immediate requirements. It will speed up the procedures. It is applicable only if the purchase values are minimal. Strongly suggests to proceed all ‘high value’ purchase through the department, it is required necessary expertise, skill and experience. In the initial stage, input from end user is vital, get their advice, expertise but don't get involved in direct purchase unless the department supervise it.
It is depend upon the types od procurement and the agreement between both the parties. However, in most general cases all the deal to be finalize by the procurement department.
Thanks for the invitation.
Contact between Suppliers and stakeholders should be through Procurement Dept. and under their supervision.
Its purely depend upon the company policy but in general scenario, all the procurement should pass through the procurement department.
I will strictly discourage the direct contact between supplier & end-user. However, contact can be established under the supervision of Procurement, only in case of genuine need.
At times I have seen Procurement acting like a Post Office between these two or gives full liberty of interaction between end-user & suppliers.
NO, but as per my experiences can’t deny the importance of end user’s PR with the vendor’s that’s play more effective role in sourcing of materials & services specially in urgency ; so controlled effective communication management should be implemented e.g. Official communication channels like web portals ,email , personal meetings with team lead.
Every effort is to be made so that the specifications are very transparent/clear so that suppliers will not be required to meet the end users. However, if at all necessary, suppliers shall contact procurement department first to meet the end users.
Dear M. Yassin,
I second all what all have been said by the others . Needless, to mention that by doing that , you'll be passing a responsibility to others that you'll be accountable for . In addition you'll over ride the System & the Procurement Process , which will eventually lead to TQM , Operation & Financial Audit Discrepancy .
B rgds,
I think that this is one of the ethics that all agree upon, which is not to have any direct contact between suppliers and the end user at all if possible. If it is deemed necessary, i.e. where specs need to be verified; then, the end user may be involved, and it should happen only under direct supervission of procurement section under what is called as a committee. This committee should include also a third party, i.e. Finance.
if supplier connected directly to the end user you will open the door for corruption.
their should be a system.
