A Purchasing Sanity Check for 2012
As the New Year begins, it makes sense to take the time for an overview of Purchasing. If only for a sanity check, it’s time to dust off that old handbook, determine what is relevant and which practices can be replaced.
a) Purchasing Policies and Procedures
When was the last time the Purchasing Policies and Procedures were updated? There should always be an assigned Owner within the Purchasing organization to ensure that the Policies and Procedures are current, and reflect the corporations’ business practices. Purchasing would benefit from having a group meeting to review the Policies and Procedures: to provide collective input utilizing expertise, and as an excellent opportunity to ensure that all gray areas are clarified. The update of Purchasing Policies and Procedures should be a mandatory objective.
b) Agreements and Contract Management
Gone are the days when paper is filed in a folder, and then in a cabinet. But which department is responsible for maintaining Agreements and Contracts? In some organizations, Agreements are stored in Legal. However, Purchasing is responsible for the Purchase Order Contract and may also maintain a copy of the Agreement along with the Purchase Order (the same applies for the Insurance information for onsite work performed). While most Purchase Orders are emailed to the vendor with or without an electronic signature, Agreements are still signed and countersigned and a copy retained by both parties. Who owns the process, the location of the Agreements, the location of the Purchase Orders, and in what format are key. The Purchasing Policies and Procedures can also inform and direct how this is managed.
c) Document Retention
Every company has a Document Retention Policy on the storage life of documents. Document Control in conjunction with Legal will have a policy outlining the minimum retention requirements. If in doubt, ask. There is no excuse for not knowing.
d) Multiple Purchasing Locations
If the organization has multiple Purchasing locations, doesn’t it make sense that everyone has the same access, knowledge base, and tools (including software and hardware). Collaboration with other site Directors to ensure information is shared, comprehensive, and circulated. The direct benefit to the corporation becomes obvious once procedures and processes are in place and followed. Knowledge gaps are reduced and eliminated.
Think about what is critical to the success of an organization. Review the resources on hand, request input from within your organization, and develop a plan to support that focus. If the focus is Cost Savings, then make sure that objective is supported and understood throughout the entire organization. Flexibility is Key. The focus can remain unchanged but also change in priority.
f) Online Purchasing
Many buyers are now responsible for purchasing products online. While some organizations are not allowed to go through outlets like EBAY or PayPal due to Terms & Conditions located on a vendor’s site, a buyer must be versed in reading the fine print and the impact that it may have on the corporation. EULA’s, SLA’s, User Agreements are all important components of online buying. Don’t ignore the fine print, and you won’t get stuck with goods you cannot afford or return.
Kathleen McCahill is a Purchasing Specialist in Corporate Purchasing at IDT, Inc.
Kathleen has worked in Purchasing for 23 years.
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”