Procurement 101How to Avoid Legislative Issues in Procurement
MOVING FROM RISK TO REWARD
Attempting to separate potential danger from potential opportunity is like trying to remove an egg yolk from the white using toothpicks: you can’t do it without making scrambled eggs. This is a metaphor for any situation that offers a large reward – hazards are a natural accompaniment. The key is knowing the correct strategy to employ in order to reduce (or even eliminate) risk. Stop using the toothpicks and a repertoire of egg-based recipes could be at your disposal.
But this blog entry isn’t about egg-based recipes. The following checklist outlines basic requirements for guaranteeing your company stays out of procurement trouble. Avoid legal challenges, employee mishaps, ethical blunders, and more. Procure with confidence.
THE SEVEN COMMANDMENTS OF PURCHASING SAFETY
- Ensure that your organization has a lawyer with expertise in procurement. This is a failsafe in the event of a worst-case-scenario.
- Establish a reasonable internal system of rules for your procurement department. Follow these rules. Don’t leave any room for mistakes due to vague or unspoken expectations.
- All procurement documents should have a liability provision. Carefully consider a waiver of liability before implementation, as they are difficult to defend.
- Understand that many procurement risks are often associated more with brand than legal issues. Private sector standards, as opposed to public, are not given the same legal recognition in court. Minimize your chances of veering down this road. Protect your company – know your customer base and maintain a positive reputation. Be transparent.
- Be able to recognize the “Frankenstein Monster” of procurement documents: although common, they’re highly risky, as they’re drafted with cut-and-paste sections from various sources.
- Never assume that the procurement professionals in your company have any training or knowledge in procurement law. At the very least, employees should be aware of their shortcomings and know when to seek assistance.
- As much as possible, monitor the quality of materials throughout your supply chain to reduce the chances of getting caught in a confrontational issue such as child labour or conflict minerals.
If the procurement department in your organization is able to check off all these boxes, then congratulations, the bridge from risk to reward has been successfully crossed! Continue to monitor industry regulations for optimal purchasing safety. The management of risk is what determines its ultimate value.
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