The sourcing and procurement function is the backbone of any organization’s supply chain. The procurement manager must have expertise in terms of vendor management right from identifying a supplier that offers top-notch quality products and competitive prices. To ensure an effective supply chain management, the procurement professionals must warrant an effective vendor management framework that includes negotiation strategies, payment terms, and dispute redressal. In their quest for the right suppliers, organizations request for quotations and catalogs, assess their alternatives, and select the best vendor. The ideal situation for any business is to explore options that create a win-win situation for both the supplier as well as the buyer.
Procurement Payment – Read the Terms and Conditions
The sourcing and procurement function in an organization finalizes the purchase terms that may include credit period or a payment term. Before entering an agreement with any supplier, the procurement manager must consider the payment terms and determine its financial impact on the organization. Moreover, an effective vendor management framework must align correctly with the business’ short and long-term objectives. The negotiation skill of the procurement manager plays a key role in acquiring the best vendor who offers the right products and materials in time.
Negotiation Plays a Key Role in Vendor Management
There are two instances where the procurement manager must negotiate with the vendors. One, while soliciting quotations and second, when deciding the procurement payment terms and conditions that benefit the company. While negotiating procurement payment terms, the organization can request the supplier to settle on flexible payment terms that create a win-win situation for all. And most important of all, ensure a robust vendor management system to keep track of payments and supplier performance.
Manage Your Vendor Effectively – Supply Chain Management
In today’s competitive market scenario, misunderstandings between the buyer and supplier are bound to take place. In such cases, the procurement manager must review their procurement payment terms and conditions to verify any breach of contract. For an effective vendor management system, the management must put in place a dispute resolution process to streamline operations. Ideally, the procurement manager must effectively communicate with the supplier and ensure to take a written agreement that can act as evidence to solve future disputes.
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