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Types of Purchasing Managers

A purchase manager is in individual who is tasked with purchasing services and goods on behalf of a company or an organization.  Purchasing managers are also sometimes referred to as buyers or purchasers in other industries.  Retail buyers and wholesale buyers are individuals who purchase goods for the purpose of reselling them.  A product purchasing agent who works within the farm and agriculture industry buys items like grain, feed and other products that are grown naturally in order to resell them or to use them for industry-specific purposes.  Purchasing managers who work within larger corporations and companies are usually tasked with many highly complex purchases and may therefore manage a team of junior purchasing agents.

If a purchasing specialist works within the retail industry or the wholesale industry and focuses on the purchase of finished goods for the purpose of selling them, such a purchasing specialist may be referred to as a buyer or a merchandise manager.  In both the retail industry and the wholesale industry, merchandise managers are tasked with overseeing distribution, inventory control, and management of buyers.  Retail buyers purchase some types of products from wholesale companies and other types of products are purchased straight from the manufacturer of certain products that are purchased for resale.  The decision often is decided by the difference in price.

Purchasing managers need to have the necessary skill set to be able to select products that have high consumer demand and that will be consistent in their profitability.  Wholesale buyers many also purchase products straight from the companies that manufacture them.  Doing so may provide lower prices for purchasing managers so that they can resell the products to various other companies and organizations to make a profit.

The various duties delegated to a specific purchasing manager many vary greatly.  Job duties may include: tracking inventory, calculating sales, checking the sales activities of competitors, monitoring overall economic conditions and monitoring consumer behavior trends.  Buyers need to be able to intelligently interpret trends in the industry and sales data so that they can keep an inventory of products that will sell and also avoid expensive markdowns.  If a purchasing manager is working for a larger corporation they typically focus on just a few product lines.  On the other hand, a buyer for a smaller retail business purchases a wide range of products that are sold in physical stores.

When a purchasing manager is working for a governmental agency or a manufacturing company they may have one or more of several titles, including director, purchasing agent, manager, buyer or contract specialist.  The terminology varies greatly by industry.  A contract manager within a governmental agency or a manufacturing company may also be referred to as a supply manager due to their responsibility for managing and negotiating various supply contracts.

One of the most important considerations is that buyers need to be entirely confident in the specific timing and delivery of all services and products.  Specific deadlines, quality specifications and cost restraints for purchases are generally laid out within the initial purchasing agreement.

July 31, 2012
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BY Bellwether
How Purchase Order Software Helps Prevent Fraud

Fiona Fraud has been working as a secretary for the School of Nursing at College Town University for nearly fifteen years.  She has a reputation for being friendly and approachable, and is generally good at what she does.  In addition to her secretarial responsibilities, Fiona is also tasked with arranging catering and entertainment for all of the events that the School of Nursing puts on each year when their newest group of graduates is matriculating.  It is easier to let Fiona have full control of the graduation events, as to split up the task between several employees would make things more complicated for everyone involved.  That is what Fiona has told her superiors, and they have no reason not to believe her or to think of her as a potential fraud risk – or so they think.

Fiona has credit accounts with several various vendors and party stores, and also has company credit cards with several local department stores and chain stores.  Whenever invoices arrive from the vendors, party stores and department stores, Fiona hands the receipts over to the accounting and billing department, who then ensure that the amounts on the receipts match up to the amount that appears on the bill.  So far there has never been a discrepancy between any of the bills and the receipts.

The problem is that no one is examining the receipts other than those in the accounting and billing department and those who work within that department do not know how much Fiona is supposed to be spending.  Because the amounts that Fiona spends are about the same each year,  the company has no clue that Fiona purchases her entire summer wardrobe on the company’s dime each year and that she also buys her Christmas presents for the next winter by using the company credit cards in the spring.  The company does not realize the risk they are taking by entrusting Fiona with the cards and has no idea of the large scale fraud she has been perpetrating for over a decade. 

The School of Nursing can prevent such fraud from occurring by establishing a purchase order system where a supervisor must be notified before Fiona goes on her yearly shopping trips to gather supplies for the graduation celebrations.  Such a system can involve various components like requiring that Fiona fill out a preprinted purchase order slip, and then placing a call notifying the stores that Fiona travels to that there must be a preprinted purchase order or that the store will not receive the funds for the purchases. 

If Fiona’s supervisors are in on the fraud (for example, Fiona may be shopping for them as well), things may become more complicated.  Having more than one person sign off on any purchase order is a great way to further minimize risk and prevent Fiona from being able to perpetrate the fraud.  The more safeguards are in place and the more people who are aware of each time Fiona will be using the company’s funds to pay for purchases the less likely it is that she will be able to continue her behavior undetected. Purchase order software has many safeguards built in that prevent someone like Fiona from perpetrating fraud upon your company. 

July 26, 2012
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BY Bellwether
How to Prevent Procurement Fraud, Part 2

The business world of today is wrought with perils that face business owners each day.  Procurement fraud is an expensive problem that is costing businesses a great deal of money each fiscal year.  This problem is not unique to large business and is also an issue for medium and small sized businesses.  The good thing is that procurement fraud prevention is possible so long as business owners take certain steps.  The following information is intended to explain a few measures that you can take to prevent procurement fraud.  By conducting thorough background checks, establishing a whistleblower hotline and reinforcement from management that fraud will not be tolerated, your business is much less likely to have to deal with the repercussions of procurement fraud.

Background Checks

Background checks are so important for businesses.  By taking steps to ensure that you are not hiring employees who have a criminal history or who have had issues involving fraud at their prior places of employment, you are much less likely to end up with employees that misuse corporate funds.  If you do not have the resources to conduct background checks on your own (an issue that many smaller businesses may face), you can enlist the assistance of a professional by hiring a third party to come in and perform the background checks for you.  Some background check services even enable you to send the names and personal information of potential employees to them via a secure channel so that you do not have to travel to their location or have them travel to yours in order to relay the information.

Whistleblower Hotlines

Establishing a whistleblower hotline is imperative for procurement fraud prevention.  Additionally, in accordance with Sarbanes-Oxley, public companies are required to have their own anonymous whistleblower hotlines that their employees can call if they wish to report violations, accounting issues or auditing issues.  Many midsize corporations are not required to follow the rule, but midsize companies can also benefit from a whistleblower hotline.  Inside tips are one of the major ways that fraud is detected within corporations, and a large percentage of inside tips come via a whistleblower hotline.  It is generally advisable for a third party to operate the whistleblower hotline, so that those who wish to submit a report are not afraid of internal backlash after they have submitted a complaint.

Reinforcement From Management That Fraud Will Not Be Tolerated

The most important thing for procurement fraud prevention is that management sends a strong message that fraud will not be tolerated.  The message needs to come from the top.  Senior management members need to ensure that those who work beneath them understand that incidents involving fraud will not be tolerated under any circumstances and that any such instances of fraud will be prosecuted to the fullest extent.  Employees tend to follow the example that is set for them by members of middle management, and members of middle management tend to follow the example that is set by the members of upper management.

July 24, 2012
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BY Bellwether
Purchasing in the Cloud: How Does it Relate to the Healthcare Industry? (Part Two)

We previously explored how purchasing in the cloud can be used for hospitals to greatly streamline the purchasing process and to maintain a proper inventory level for essential items such as cleaning supplies, medical equipment, medical and surgical supplies, and medications.  However, smaller medical offices and practices can also benefit from purchasing in the cloud.  In this entry we will explore how cloud-based software can be used for smaller medical organizations and practice groups, and even for single practitioner practices.

The old-school mentality that many seasoned medical professionals possess may be beneficial to the practice of medicine, but it may not lend itself well to keeping a medical practice updated with the newest and most efficient software, policies and procedures.  The following information shall explore how businesses within the healthcare industry can utilize cloud-based software to track their stock of inventory and medications and to place purchase orders when they are needed.

Purchase to Pay Services for Small Medical Practices

Running a smaller medical practice is similar to operating a hospital in certain respects, but it is different in some respects.  For example, while patients who present with similar conditions may be treated quite similarly at a hospital and at a medical practice, smaller medical practices generally do not have a large staff.  Many sole practitioners simply cannot afford the expense of hiring a dedicated individual to create purchase orders and to keep track of inventory levels so that items may be reordered before they run out.  The task may then fall to the receptionist, nurses or medical assistants, individuals who may have so many other things to accomplish in a given day that essential orders may simply fall through the cracks. 

If you are the owner or operator of a smaller medical practice and you are already using purchasing software, you may not know that cloud-based software can provide you with an even more streamlined process for a lower cost.  That is because purchasing software requires that you have a dedicated individual that is trained to use the software, or that several members of your staff are trained on the software so that they can create purchase orders as necessary.  Purchasing in the cloud is a much better option, as it eliminates the need for you to install software on your dedicated business network and also eliminates the need to maintain and update the software on your own.  With procurement to pay services and cloud-based software, the software does not need to be installed on your dedicated business network and instead remains on the server that belongs to the vendor.  The vendor takes care of all of the updates and maintains the software, eliminating the need for you to do so.

Best of all, cloud-based purchase to pay software fully automates the procurement process, from ordering and completing transactions,  to creating inventory lists and automatically generating purchase orders when supplies are low.  Once these tasks are completed in the cloud, your staff can concentrate on the more essential duties of their jobs.   Purchasing in the cloud is truly the best way to streamline operations for your small medical practice so that you can drive down your expenses while updating your business with the latest in purchase to pay technology and software.

July 23, 2012
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BY Bellwether
Understanding Procurement Fraud – A White Collar Crime

White collar crime comes in many forms, but procurement fraud is one of the little known types of white collar crime.  It can be extremely costly for business owners, but many business owners simply do not know of this serious issue.  This may be due to the fact that transactions that involve procurement fraud appear on their face to be legitimate business transactions that take place between a business and vendors that are assumed to be legitimate entities.  On top of that, many businesses who fall victim to a procurement fraud scheme do not report it to the authorities, instead choosing to settle the issue in private.  The following is a real life example taken from a recent news publication that highlights the fact that a business of any size may fall victim to procurement fraud.

Most simply defined, procurement fraud exists in situations when an entity gains an advantage, sidesteps an obligation or causes some sort of loss through dishonest actions of an entity, contractor, public servant or individual who is involved in said procurement.  One recent example of procurement fraud is highlighted in the San Francisco Chronicle’s online news publication SFGate.  The story is of a small store in Quincy, Massachusetts that is called Pat’s Mini Mart.  He has recently been charged with perpetrating procurement fraud that involved allowing customers to use their Food Stamp cards as atm cards in order to withdraw sums of cash rather than using the funds to purchase food as they were intended to do.

The owner of Pat’s Mini Mart is a gentleman named Pat Lu.  The scheme was relatively simple: An individual who was a Massachusetts Food Stamp recipient would travel to Pat’s Mini Mart with their EBT (Electronic Benefit Transfer) card, and would make a purchase using the card.  The illegal element of the transaction was that Lu would charge the card for far more than the actual purchase price of the items, and would then hand over the extra cash to the customer.  Pat’s Mini Mart would then receive the full funds from the food stamp card.  These transactions are absolutely illegal, and although it may not seem like such a serious issue when you take one individual case on its own, the funds definitely added up over the years.

In all, Lu has been charged with amassing at least $700,000 in fraudulent transactions, thus defrauding the government of well over half a million dollars.  Some other cases involving procurement fraud involve much larger businesses.  In certain cases, members of the management are so embarrassed to have fallen victim to a procurement scheme that they do not wish anyone else to find out that it occurred at all.  Estimates suggest that the average company will lose approximately 6 percent of yearly revenue due to procurement fraud, so it is clearly quite a serious issue that deserves attention.  If you are the owner of a business, you should be diligent to ensure that you do not fall victim to a procurement fraud scheme.

July 17, 2012
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BY Bellwether
What Every Purchasing Manager Can Learn from the Sales Team

Have you ever considered the personality or skills of a sales manager versus a purchasing manager? Did we lose you already? Maybe you are asking yourself what does a sales superstar have to do with the purchasing department – there couldn’t be two positions further from each other. If you stop to think, there are actually quite a few similarities; areas that every purchasing manager can learn from sales. This is because procurement often leads to the development or strengthening of several key skills needed in the world of management. The ability to keep oneself motivated, the ability to maintain structure and organization skills, and finally, the ability to prioritize and focus on tasks at hand are shared by top salespeople and procurement managers alike.

Firstly, a salesman has to be driven. One day you’ll find that sales are up and business is going well. Another, you may worked all day, beating the pavement, dialing the phone, and haven’t gotten a single sale. A good salesman cannot give up when it appears that a sale is unsuccessful or when times are tough. That internal drive is what makes a salesperson successful. They have a sense of urgency that they will get the job done no matter what setbacks occur or hurdles they have to jump.

A purchasing manager must be driven as well. They know that the inner workings of the business rely directly upon how well they do their job. A lazy manager without drive will eventually cost your company.  

Secondly, a good salesman will be structured. He will have a commanding knowledge of the product or service being presented. He will be able to adequately explain a product or service to the customer in an easy to follow manner. He must be organized in order to present the information to a customer. A disorganized presentation will leave the customer feeling confused and no matter how great the product or service, failure to stay organized will risk losing the sale.

A purchasing manager must also be structured. Using a paper based system can trip up even the most organized and structured purchasing manager. A cloud-based purchasing software will go a long way toward helping get and stay organized.

Thirdly, a good salesman will have laser focus on the task at hand. A salesman cannot be distracted with tasks less important than the sale at hand. He must learn to prioritize every function and every activity. Prioritizing is an important skill for salespeople because there will always several things to think about. Focusing all efforts on finding leads will never result in sales. Focusing all efforts on getting the sale means once that is over, whether they get the sale or not, there is a lag because now there are no more leads to call on. Focusing on the right activities, refusing to get sidetracked, and following the process through to the destination is key to being a good salesperson.

A purchasing manager must also be focused. Being able to tell the difference between what should be done and what needs to be done quickly is an important distinction that a purchasing manager will need to be able to ascertain. Departments seem to exist in their own bubble and when submitting procurement requests, often think their request is most important and should be top priority. By staying focused on the big picture and not being easily swayed or pressured by others, a purchasing manager can get all requests handled in a timely and efficient manner.

As you can see, procurement managers and sales managers do actually have several things in common. The abilities to prioritize, organize, and be driven will be utilized every day in various situations, and salesmanship is a perfect tool in which to teach procurement managers how to excel in their positions.

July 12, 2012
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BY Bellwether
A Valuable Procurement Manager Will Lead Your Company’s Innovation

A procurement manager is not typically the first person that comes to mind when you asked about innovation in a company. However, much rests on his or her able shoulders. It is up to a procurement manager to find out ways in which the company can benefit further. The job description of a procurement manager may vary among companies, however there is much more to the position than simply placing orders, handling procurement and overseeing requisites across various departments; a valuable procurement manager is also one of the company’s innovation leaders.

Normally, when it comes to innovation probably the first people that come to mind in a company are its  IT manager and business development manager. A business development manager may be working on new projects and developing presentations about new ways the company can innovate and expand the business. The IT manager or a Chief Information Officer is constantly looking at ways to upgrade the existing hardware and software. In many cases, in this rapidly evolving industry, there comes a point when upgrading no longer makes sense in the presence of new technological innovations in the market.

A procurement manager also has to work towards better procurement policies, better vendor management, seamless purchasing and delivery and also to efficiently manage the items or equipments in stock and the necessary requisitions. They are the eyes that see everyone throughout the company and all departments. They are responsible for procuring these requests. In the process of all of this, it is actually the procurement manager that discovers innovative solutions to not only their own processes, but those in every department throughout the company.

Here are some instances where a procurement manager can employ innovation for the benefit of the company. A procurement manager can contribute to a company’s innovation is by converting to cloud procurement. Conventional purchasing practices have been replaced by P2P systems and they have further been developed to be used as apps on smartphone. Cloud procurement has a plethora of benefits for companies and it should be a job of the procurement manager to come up with such recommendations which can dynamically change the way a business operates.

A procurement manager researches the vendors and the items that are put up for procurement. In so doing, he or she may find newer, more innovative products to fulfill a PO that maybe the department head that requested was not aware of. Or maybe in researching other vendor options the purchasing manager finds a vendor that has innovated beyond that of a current vendor and is replaced, adding more selection and options to the catalog for department heads to view. In so doing, the department heads then find innovative solutions to standard requests or problems they face.

Therefore, a procurement manager not only recommends innovation but also sees to it that they are put in place and adapted to by every department in the business. So if you really stop to think about it, a procurement manager can play a huge role in a company’s practices, revenues, budgets and also profits as they lead your company’s innovation. 

July 10, 2012
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BY Bellwether
Get The Whole Team On Board With P2P

Having a P2P system in place can be highly rewarding for almost any small to medium size business. However, when making the change to a paperless environment and implementing a P2P system, you will sometimes find that there are hold outs. It’s natural. There are always people that fear change. Maybe it is one person or maybe you have an entire department dragging their feet. Unless every department and every staff in a company are on board adhering to the implementation of a P2P system there can be problems in the process of streamlining the entire procurement and purchasing cycle.

It is unquestionably essential to have the whole team on board with P2P. In order to do so, it may take some additional time training. It may take one-on-one meetings. Even though the decision has been made, it may take some extra work in reselling the entire team and getting them to buy into the new process.

A major reason to have every department and every staff using the P2P system is to minimize risk and ensure compliance. When a P2P system is put in place, a company ideally would have certain policies framed to adhere to the new practices. It is unlikely for a company to have a P2P system as well as conventional modes of procurement and purchasing. Non adherence to the new policies and practices can disrupt the whole process. If two departments abide by the new practices and one department does not then a company would inevitably face issues conducting the procurement and purchasing cycle. Consequentially, there is an increased risk of consuming more time, inviting unnecessary expenses and at the end costing the company in terms of time, money and also man hours. If people understand the problems that can occur, they may be more willing to work within the new system.

Another option is to show how the new P2P system enables a company to be efficient with its procurement and purchasing. It is not just about placing the orders quickly but also being in sync with all the latest updates from the vendors, the best prices and also the approved variety of items that the company can procure or purchase. A certain department staying out of the P2P loop would be unable to access all such latest amendments and that is not in the best interest of the company or that department. For instance, if a vendor has updated the set of prices of some new equipments and the P2P is fed with that information, going by the conventional mode of purchasing and procurement may lead the department to make wrong choices of items and also dated pricing. Hence, it becomes mandatory for any business to have all and sundry in the company to adapt to a P2P system. If the person or department sees how it can benefit them, then they may also be more willing to participate.

It may take some time and extra work, but having the entire team on board will make the process work smoothly and efficiently.

July 5, 2012
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BY Bellwether
Cloud Procurement In A Culture Of Apps

Cloud procurement could easily usurp the dominance of conventional procurement practices over the course of two to five years. Businesses all across the globe have taken to cloud computing for a number of departments and it was only natural and inevitable for cloud procurement to gain prominence.

If the smartphone was not an intriguing enough device, the millions of apps have made it more enticing. These days, whether we talk about procurement managers or entrepreneurs, people have taken to using apps for a wide array of reasons. From being guided to the best route to the airport to checking the local weather, staying updated on the various upcoming business summits to one that can automate updating of your daily schedules using your location and time. The penchant for smartphones and its apps among procurement managers have made cloud computing an easy exercise and a highly viable one.

Cloud procurement has a plethora of benefits. The first obvious advantage is that despite being accessed via a smartphone, it is perfectly synced with the ERP solutions or purchasing software that a company may have in place. Whenever there are any purchase orders, approval of orders or delivery updates, cloud procurement allows you to access the central database of the purchasing software on your smartphone and works in real time recording all the details. The second biggest benefit is the sheer portability that procurement managers get to enjoy with cloud procurement. Using a purchasing software simplifies a lot of complex tasks for any company and given the rise of smartphone users and the extent to which they are involved in various aspects of professional tasks, it is perhaps the easiest way to be anywhere at any time and work on any stage of the procurement process or supply chain.

Cloud procurement also make way for a very easy transaction. Typical cloud procurement requires the vendors or suppliers to share a lot of the onus in keeping updated catalogs and various details which makes the job of procurement managers and hence clients simpler than before. Additionally, in most cases the cloud procurement software functions as Software as a Service (SaaS), which implies that once the purchasing software is in place then there are hardly any expenses or investments going forward. Considering the benefits of cloud procurement in a world filled with smartphones and apps, it is easy to see how this is quickly becoming the standard convention in years to come.

Are you ready to upgrade to cloud procurement?

July 3, 2012
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BY Bellwether

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