The Vendor Management Office: Why Customers Really Don't Know Better

Stephen Guth's Vendor Management Office Blog

All Things Sourcing, Procurement, Negotiations, and Contracting

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Stephen R. Guth, Esq.
Stephen has over 15-years of procurement, outsourcing, and vendor management experience. He has worked for Aflac Insurance, Dell Computer, and Ryder System. Stephen is a licensed attorney and a member of the District of Columbia and Virginia Bars. He is a graduate of the University of Miami School of Law (J.D.), the University of Maryland University College (MSM), and Saint Leo University (B.A., summa cum laude). He holds the following professional certifications: Certified Professional in Supply Management; Certified Commercial Contract Manager; Certified Purchasing Manager; Certified Technology Procurement Executive; Fellow, Life Management Institute.

Stephen has taught procurement-related courses as an adjunct professor with the University of Maryland University College’s Graduate School of Management and Technology. He has served on the Professional Standards and Ethics Committee of the National Contract Management Association Board of Directors.

The views expressed herein are the views of the contributors and commentators, and such views do not necessarily reflect the views of Stephen's employer.
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Why Customers Really Don't Know Better

There are some professions within the typical organization where the internal customers feel that they know better and can do a better job than those that are truly responsible. HR and Marketing are a couple of examples. But I think the purchasing function is the best example, where customers routinely try to circumvent purchasing. I don't blame them—they purchase goods and services in their personal lives all of the time, so I can see why customers think they're qualified to purchase goods and services in the workplace.

As a purchasing professional, one of your responsibilities is to educate your customers on the value of the services that you provide. To that end, here's a list as to why purchasing should be left to the professionals.

Purchasing professionals have specialized training that customers don't have, such as competitive bidding, price and terms negotiations, and dispute resolution.

Purchasing professionals develop, train on, and maintain a reasoned purchasing process that protects their employers from risk and liability—at the same time ensuring that vendors are treated fairly and ethically.

Purchasing professionals have specialized knowledge related to contracting and contract terms such as representations and warranties, indemnification, limitations of liability, and governing law.

Purchasing professionals maintain a network of functional specialists to assist in the purchasing role (e.g, audit, tax, law, controllers, treasurers), that the customer doesn't have or doesn't use often enough to maintain.

Separation of duties provides control over collusion between customer and vendor (the typical "triad of separation" is to segregate requisitioner/receiver, from buyer, from payment.)

Purchasing professionals can wear the "black hat" and be the "bad guy" during negotiations to keep the customer's relationship with the vendor "clean."

Purchasing professionals aren't "too close to the purchase" such that they can remain impartiality and objectiveness to ensure the process isn't compromised by emotion, subjectivity, or unnecessary urgency.

The purchasing department maintains a centralized contract repository to manage contracts, including terminations and expirations—and is also responsible for procurement-related record retention.

The purchasing department develops and maintains centralized vendor processes, such as vendor categorization and rationalization.

The purchasing department develops, maintains, and enforces an organization-wide purchasing policy.

The purchasing department has greater visibility to vendor relationships (e.g., the volume of spend) and manages those relationships to better advantage the business as a whole.