Anyone work in procurement or purchasing

Stylehutz

Hello All...

Had an interview yesterday for a buyer job and think I blew it. I was asked, what you would do if your only supplier for a product had let you down and the impact on the whole item was to delay the complete delivery date. They said it wasn't possible to source another alternative product or use another supplier. My mind as usual went blank and could only come up with to persuade the initial supplier to pull out every effort and meet the delivery date that you initially promised or the consequences would be catastrophic. What was the correct answer to the question?

bap98189

There is no single correct answer, but I would have thought that something along the lines of informing the rest of the management team would be a priority. In particular the production manager and sales manager - they need to plan production schedules and let the customer know they aren't going to get their widgets on time.

Stylehutz

bap98189 wrote: »

There is no single correct answer, but I would have thought that something along the lines of informing the rest of the management team would be a priority. In particular the production manager and sales manager - they need to plan production schedules and let the customer know they aren't going to get their widgets on time.

Thanks, that seems a decent answer. I should have asked them if it was hypothetically impossible for the supplier to meet the delivery date and if it wasn't your answer makes good sense.

PlutoinCapricorn

What about penalty clauses and compensation? If something is vital then the supplier should have been made aware of this in advance and an agreement made in case of unforeseen problems.

eamon

I would imagine that most commercial purchasing & supply contracts would contain a "Force Majeure" clause. But in reality if it happens then its a case of managing customer expectations buy using clear language when telling others what the problem is and when it will be solved. Of course many companies don't do themselves any favours in their procurement, sales, logistical, accounts, manufacturing and supplier management functions. In the OP example there is little that can be done except to recommend that for future proofing themselves against similar events alternatives and contigency plans should be investigated at the very least.

Evilm

you manage the situation:

- you ask the supplier if a compromise can be met - alternative temporary parts, some stock, rearrangement of the delivery schedules for other parts to enable other work to be done instead.

- you inform relevant people internally regarding the matter and seek to get the current workload rearranged to accommodate the necessary change

- you manage the expectations of your customers in line with the responses from the above two tasks and correspondingly work with them to mitigate the disruption the issue will cause.

Then you hope it all works out!

LTL

I work in Procurement, so here's my take on it (just key points):

- Take overall responsibility of the situation and follow through until the situation is resolved.

- Make all relevant stakeholders aware of the situation

- Ensure you have a revised ETA from the supplier, getting the best out of them by ensuring they understand the impact on your business. Clarify this to the relevant stakeholders.

- Post-situation, ensure there is a) an alternative supplier sourced (if possible) and b) ensure that you have a closer relationship with your current supplier going forward (Kraljic matrix & relationship spectrum if you've studied) and that a continuous improvement program is in place. If possible, add KPIs to the contract to ensure your needs are met or if not you are covered for liquidated damages. Going to a contract should only be a last resort though - but a strong contract in place is required.

PlutoinCapricorn wrote: »

What about penalty clauses and compensation? If something is vital then the supplier should have been made aware of this in advance and an agreement made in case of unforeseen problems.

Penalty clauses are non-enforceable.

eamon wrote: »

I would imagine that most commercial purchasing & supply contracts would contain a "Force Majeure" clause. But in reality if it happens then its a case of managing customer expectations buy using clear language when telling others what the problem is and when it will be solved. Of course many companies don't do themselves any favours in their procurement, sales, logistical, accounts, manufacturing and supplier management functions. In the OP example there is little that can be done except to recommend that for future proofing themselves against similar events alternatives and contigency plans should be investigated at the very least.

"Force Majeure" would not necessarily apply here. The story did not confirm if it was an "Act of God" (Floods etc.)

There is a LOT that can be done in the OPs original story and many many reccomendations.

bap98189 wrote: »

There is no single correct answer, but I would have thought that something along the lines of informing the rest of the management team would be a priority. In particular the production manager and sales manager - they need to plan production schedules and let the customer know they aren't going to get their widgets on time.

I'd have to disagree and say there is a correct answer here.

Evilm wrote: »

you manage the situation:

- you ask the supplier if a compromise can be met - alternative temporary parts, some stock, rearrangement of the delivery schedules for other parts to enable other work to be done instead.

- you inform relevant people internally regarding the matter and seek to get the current workload rearranged to accommodate the necessary change

- you manage the expectations of your customers in line with the responses from the above two tasks and correspondingly work with them to mitigate the disruption the issue will cause.

Then you hope it all works out!

Agree with Evilm here. Only thing I would change is 'customers' to 'stakeholders'. Your customers are internal and 'stakeholders' is the fancy procurement lingo to use