Saturday 27 July 2013

Emergency Procurement and Procedures as a Purchasing Policy (Part 2)

Authored by Azra Sultan

Previously we discussed the term emergency procurement and the methods for acquiring goods and services during this process. The key aspect now is to understand how to plan individual emergency procurement. Whether man-made or natural, preplanning can always minimize the risk factors involved in an emergency procurement. There are some pre and post emergency methods which may help the procurement department respond to situations proficiently.

  1. Contingency Plan: The overall contingency plan should meet objectives during emergency situations to minimize the risk factor and keep the interest and benefit of organization intact. Similarly, it is obviously practicable to have a contingency plan prepared by your supply source and maintain a mechanism to periodically check the status of their inventory to ensure uninterrupted supply in an emergency situation. A web-based collaboration tool can provide immediate real-time access to supply side and establish effective communication with the sources, thus bringing a win-win situation for both the organizations. 
  2. “As and when” call: An effective procurement planning would surely help eradicate the need of emergency procurement. Blanket Purchase Agreements would not only reduce the risk factor during emergency requirement but would surely help organizations in maintaining the cost constantly incurred for products / services in question. The effective contract management tools can surely help reduce procurement lead time and achieve cost efficiency and effective procurement during an emergency procurement need. 
  3. Maintain appropriate inventory levels: It is for sure that not even in a calamity but a normal operation may be effected if the inventory level is not checked and maintained. First come first out is also a key driver in maintaining effective inventory. It is established that an efficient Inventory Management tool can help organizations reduce operational costs while improving service delivery quality and increasing customer satisfaction. With a well-built structure in place, one can be free of surprises or extraneous expectations at the end of the season. 
  4. Effective vendor relationship: The buyers with adversarial relationships with their vendors will struggle, so this is the right time to maintain an effective vendor relationship for future emergency procurement needs. A balanced and well implemented supplier relationship management framework helps organizations to identify and manage buyer’s obligations to the supplier which ultimately results into achievement of operational interests of both the organizations (buyer & supplier). 
  5. Have multiple sources in hand: It is ideal to have relationships with multiple sources for immediate identification of an alternative source when established source fails to deliver commitment. This approach can help reduce the supply risks for all types of procurement categories such as routine items, leverage items, strategic and bottleneck. 
  6. Empower your resources: Although a purchase policy provides certain flexibilities during an emergency purchases to forgo policies; however it is still advisable to equip your purchase personnel with necessary techniques and procedures to be followed to handle such situations. A procurement professional should be trained enough to make a reasonable and justifiable decision in such circumstances where certain steps may be waived except the tender evaluation and approvals. The emergency situations do not relieve an organization from negotiating a fair price and documentation during such circumstances. 
  7. Market Intelligence: It is of course a purchaser’s prime job responsibility to keep a market insight for economical and reliable sources and they should be continuously locating and evaluating to develop a reliable source as a contingency plan. The action plan may vary in case of emergency purchasing of strategic and bottleneck items. As the purchases of these items may not be possible in case of emergency procurement, however a well-informed purchaser can use the market intelligence tools to exploit the situation and to make the most of his high buying power to secure good prices, even from a single source of supply.

Though there are many ways to respond during emergency procurement or pre-plan unforeseen incidents as well. To mitigate the risk however, a well-established procurement policy and a knowledgeable procurement resource can surely contribute to eradicate risk factors and help the organization to flourish.


1 comment:

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