Managing a business is hard work in itself, but it’s made even harder when you have to deal with flaky or problematic vendors or suppliers. In procurement management, building a strong working relationship with your vendors or suppliers is key to ensuring that your business runs smoothly with nary a hitch. But as with all things in life, problems are inevitable, and occasionally, they may crop up at the most inopportune of times. Implementing a problem‑solving approach in your business helps you prevent operational issues from recurring, allowing you to keep your business running at optimum conditions.
Having a solid procurement policy is, of course, the first commandment in the procurement management rulebook. A procurement policy outlines the best practice principles of procurement management, and the necessary arrangements for effective goods and services procurement. It’s used when buying goods and services, and applies to both the buyer and the supplier. With a strong procurement policy in place, there is readily-available guidance that can help to resolve issues that may arise in the procurement process.
As procurement management entails a range of processes and involves many stakeholders – mainly vendors and suppliers – the probability of problems arising is high. In this article, we will take a leaf out of the procurement policy rulebook and review an often-recommended problem‑solving approach that will help keep supplier/vendor issues at bay.
Identifying the problem
Supply interruptions are a business’ worst nightmare, and they can come in the form of production delays or interruptions, unnecessary steps in the procurement management process, or even miscommunication between parties involved. The first step to solving these problems is to pinpoint the problem at hand. To do so, it’s helpful to meet with the parties involved in the procurement process and obtain their views as to what’s causing the supply disruption. Your vendors or suppliers are your first points of contact in the procurement management process and therefore, it’s imperative that the communication lines are clear between both parties. It’s also good to review the procurement policy with your vendors or suppliers to ensure that everyone is clear on the agreed terms and conditions before proceeding further. In doing so, you may realise that the problem was caused by non-adherence to specific processes outlined in the procurement policy, allowing you to isolate the issue and begin rectifications.
Define the present situation
Now that you’ve identified the problem at hand, you’ll need to see for yourself the current situation in the procurement process that’s either causing the problem, or is the problem in itself. Asking questions is always a good way to start when trying to obtain more information and in this case, there are six main questions to ask: Who, what, when, where, why and how. These six questions cover the whole information-gathering process that allows you to fully understand the situation causing the supply issues that you’re facing, and give you the necessary data and information to begin remedial action.
Be sure to involve all the stakeholders in the procurement management process, and document the information gathered in a systematic manner. The information gathered can be assessed against the procurement policy to determine whether best practices are being implemented accordingly, or if parts of the procurement policy are being disregarded, consequently causing the problem at hand.
Emplace temporary corrective measures
Instead of overhauling the whole procurement process to resolve the issues faced, it would be more cost-effective to put in place temporary solutions to the problems. By doing this, you also avoid wasting resources and disrupting daily business processes that are imperative for smooth business operations. In this case, brainstorming for temporary solutions helps you gain a store of different points of view and suggestions, which will come in handy for a quick fix. By doing this, you encourage collaboration among key stakeholders and management personnel, who have a clear understanding of the procurement management process and will be able to help. Of course, having a backup plan is a must have – especially with regard to procurement management – as it helps to prevent disruptions in daily operations. As the saying goes, “Hope for the best, but prepare for the worst”.
Determine the source of the problem
Having identified the problem and put in the necessary temporary measures, it’s time to determine the root cause of the problem. Nipping problems in the bud is a cost-effective practice that not only prevents the same problem from recurring in future, it also helps you clear the slate and maintain a positive, long-term relationship with your business stakeholders. By fixing issues early on, you also avoid the possibility of them festering into bigger issues – which would require more time and effort to remedy – and can devote your time towards growing your business. As renowned management consultant Stan Slap would put it, “There will be plenty of other problems in the future. This is as good a time as any to get ahead of them”.
Propose effective solutions
Once you’ve determined the root cause and have obtained all the data and information you need on the specifics of the problem, you should be able to come up with several solid solutions to address the issue at hand. This part of the problem-solving process should involve all the key stakeholders, especially teams that will be affected by the solutions that you plan to employ. This is so that everyone is aware of the issue at hand, and can come to a consensus on the best solution. Evaluate the pros and cons of each potential solution, as well as its success ratio. The solutions that are proposed should also be assessed against current procurement management methods and the procurement policy in use, to ensure that there are no conflicts. As mentioned earlier, it’s always good to have a backup plan in case the first solution doesn’t go according to plan.
Establish an action plan
Having identified the right solution to the problem, it’s time to put the wheels in motion and resolve the issue in the shortest possible time frame so that business operations can go back to normal. Instead of rushing headlong into the process, develop a timeline and be sure to allocate the necessary resources required to successfully deploy the solution. Go through the processes with the staff involved, and make sure that your vendors and suppliers are privy to the processes as well. Once the necessary processes are in place, monitor the progress of your solution to see if any amendments are needed, and apply them as required.
Evaluate the outcomes
The solutions you implement are only solutions if you know for sure that they’ve resolved your problems. Although you would know that your solution is a success if business processes run smoothly and everything returns to normal, it’s helpful to have some concrete data to evaluate the success of your implementations. Measuring the progress of your solution against key performance indicators is a good start, along with certain benchmarking procedures that help you see the difference in the level of business performance before and after implementing the solution. These evaluations are useful for key management personnel to develop future procurement policies, and can even be used to improve overall business processes. It’s also important to know where gaps exist between actual and anticipated results so that the solution can be fine-tuned accordingly.
We hope that these few steps will help you solve your problems with vendors/suppliers. If you need more help, feel free to visit our Procurement Learning Centre to learn more or if you need to source for new vendors, we are always ready to help – and for free!
ThunderQuote is the most comprehensive business services portal in Singapore, Australia and ASEAN , where hundreds of thousands of dollars of procurement contracts are sourced every month by major companies like Singapore Press Holdings, National Trade Union Congress and more.