The 25 New Rights of Purchasing, Part II

PurchTips edition #277

Ready To Go Beyond The Original “5 Rights?”

The term, “5 Rights of Purchasing” applies to a combination of deliverables that come together to make a successful procurement process. Then, in edition #275, we introduced the first of the “25 New Rights of Purchasing” to replace the traditional “5 Rights of Purchasing”

This edition adds a few more:

  • Right Product or Service – As a purchasing professional, part of your job is ensuring that demand is satisfied by supply. Traditionally, this meant ordering a product that matched what the end user specified and getting the proper quantity delivered on-time. Today, you have to know the products and services you buy and your internal customers to verify that specified ideal product or service.
  • Right Warranty – Businesses need to focus on lifecycle costs and cradle-to-grave value. Getting a product that works upon delivery isn’t enough. It would help if you secured assurances that the products or services you buy will serve your organization for the long term. It would be best if you negotiated the optimal warranty for all significant purchases.
  • Right Payment Terms – With interest rates being so low for years and little upward movement expected, organizations rely on purchasing professionals more than ever to improve cash flow. You do so by negotiating longer payment terms and obtaining early payment discounts that exceed returns from alternate cash uses.
  • Right Innovation – Almost every organization wants to build an advantage over competitors. As such, you must look to your supply base for innovative ideas that will give your organization a unique value proposition unmatched by competitors.
  • Right Social Responsibility – To compensate for past societal inequities, broaden their appeal to specific demographic segments of their client bases, and improve their public image, today’s organizations try to direct percentages of their spending to diverse suppliers, local suppliers, small businesses, and other classes of suppliers. You need to ensure you extend opportunities to these particular groups.

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