Even if you are doing the purchasing yourself you should create a policy as a reminder for yourself and a standard for when you can delegate the duty.
Your policy should include who can purchase for the company. What items can each person purchase – are there different buyers for overhead item than production items? Are there limits that need approval from higher authority monetary limits, length of contract or others?
Do you require multiple suppliers for critical items? Is no one vendor to have more than a given percentage of your work so that you can change venders? Do you require multiple bids on all purchases or only larger purchases?
Are there critical suppliers who will be selected based solely on quality or critical trait? Who writes the specification and can it be altered or changed based on price, delivery or service offered by vender?
What is the company's position on employees who do purchasing accepting lunches, Christmas presents or other gifts?
Create a policy regarding purchasing from relatives of friends?
Is there information in your purchasing specifications that is proprietary or confidential? How do you expect this information to be protected?
Do you have minimum inventory that you need to maintain either a specific quantity or a time requirement such as two weeks supply? If a vender keeps sufficient inventory can you purchase "just in time" to minimize inventory and maximize cash flow? What is the lead time on the purchased items and how does that impact cost and inventory?
On non inventory items what is the process for requesting, specifying and pricing, bidding and ordering?
You should have a standard contract or purchase order for purchases. Who can sign contracts for the company? When does an attorney need to review the contract? Who can agree to changes in the standard purchase order or contract? In a future article we will discuss a purchase order system to control purchases and costs.
Original content copyright Thomas Robinson 2010
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