Enhancing Purchasing Processes through Effective Follow-Up

Purchasing is garnering increasing attention from top management due to its significant impact on profitability and supply chain performance. The purchasing process involves six key steps: specification, supplier selection, contracting, ordering, expediting, and follow-up. In this article, I delve into the final step: follow-up.

Once the product, service, or works have been received and approved by the internal customer during the expediting process, the supplier’s task is largely complete. However, there are still several important activities for the purchasing department to address.

Follow-up encompasses a range of tasks, including resolving warranty claims, managing penalty clauses, addressing cost escalation factors (such as currency fluctuations or changes in fuel prices), and ensuring compliance with contract specifications. It also involves maintaining purchasing documentation, conducting project evaluations, and overseeing agreements related to spare parts and maintenance.

Spare parts and maintenance are critical for ensuring equipment uptime and operational continuity for many businesses. Therefore, effective supplier control is essential for these activities and forms an integral part of supplier performance evaluation.

Maintaining thorough and up-to-date records of each supplier’s capabilities is a key responsibility of the purchasing function. Experiences with suppliers and their performance should be documented in a vendor rating system, categorizing suppliers as A (excellent), B (acceptable with occasional issues), or C (unsuitable for future business). This simplifies future supplier selection and enables the organization to streamline its supplier base while improving supplier relations. Exit discussions with C-rated suppliers can also yield valuable insights for internal process improvement.

Lessons Learned

The follow-up step is vital for post-purchase care and critical evaluation, benefiting both the supplier and the internal organisation. Unfortunately, many companies overlook this final step in the purchasing process. Purchasing staff often become too consumed with resolving immediate issues, neglecting valuable lessons from past experiences. Additionally, poor supplier performance may sometimes stem from internal procedural inefficiencies, presenting an opportunity for improvement.

Concluding the purchasing process or cycle, the follow-up step provides valuable insights for future purchasing decisions. Each step in the purchasing process must be executed meticulously to ensure the delivery of products, services, or works that meet user specifications, on time, and within budget.

Mastering the six purchasing steps equips organisations with the tools for effective supplier relationship management, process excellence, and continuous improvement.

Dr. Marco Tieman

CEO, LBB International