You rely on a supplier who isn’t performing well, and you feel cornered. To be brutally honest, you are to blame for your current situation due to your lethargy!
Procurement is a proactive function. Fixing the problem is straightforward but very time-consuming. Research the market for options and alternatives to diversify your supplier base. Develop these new suppliers to align them with your company’s goals.
However, don’t make the same mistake of completely committing to one supplier again, as you’ll end up in the same situation. Diversifying by having a few suppliers for the same or similar product or service in your base offers two key benefits: firstly, your problematic supplier will likely improve, and secondly, you’ll create a pool of suppliers to choose from, fostering healthy competition.
How to Diversify Your Supplier Base for Better Performance
You struggle to match your orders with suppliers’ invoices. Matching your order, goods/service receipt note, and supplier invoice is an essential control procedure in any business. This process is called three-way matching, and it ensures that nothing undelivered or unordered gets paid.
If you struggle to match these documents, there is a serious problem in your process that needs to be rectified as soon as possible.
Implementing a Three-Way Matching Process to Streamline Your Procurement
The process should be simple and quick to complete. There should be a common, unique reference on all three documents, usually the order number. This reference is easy to identify by different people and departments involved in the procurement process, ensuring a smooth workflow without delays or unnecessary investigations to trace what happened.
Basically, it should work like this:
- The procurement department matches information from the order with the supplier quote and issues an order number (the reference for all subsequent steps in the process).
- The supplier references that order number on their delivery note. When delivery is made, the warehouse uses that reference to create a goods/service receipt note.
- The goods/service receipt note and order are then matched in Accounts Payable according to the unique order number on the invoice issued by the supplier.
This simple process ensures that no unfulfilled orders or deliveries get paid.
Let’s discuss how to implement a three-way matching procedure in your company and eliminate the risk of paying for unfulfilled orders – book a free 30-min consultation HERE!
