Question

Purchasing is not inherently risky because there are a lot of people watching over the process? Do you (dis)agree with this statement and why?

Answer 1

I disagree. Purchasing is inherently risky. Though there are many people involved, vendor relations and negotiation with the vendors lies with purchasing department. The performance of purchasing department affects all businesses including manufacturing and projects management. The PO terms and conditions are entered into by Purchasing team. If purchasing team fails to give proper item details to the vendor including quality details, delivery details, payment terms, etc. the business suffers. If POs are not sent to all the vendors, then business suffers. If the rate negotiated with the vendors is above budget, business suffers. If the financial position of the vendors empanelled is not strong, purchasing team is not able to negotiate the best rates with the vendors, business suffers. If procurement is not near the use of the goods / services, the business has to arrange for more transportation and more time to deliver. The business ethics of the vendors play a crucial role in the business, the duty to assess such business ethics is with purchasing team. Inviting costing of vendors, asking independent quotations from other vendors etc. are with purchasing team. Purchasing team deals with a lot of risks and is inherently risky.