A good friend of mine called me a few weeks ago to ask my advice related to a purchase she had to make for her marketing team: a brochure for their forthcoming new brand launch. She has little commercial purchasing experience and wanted to get the most for her money, while avoiding potential pitfalls. So here are my condensed advices I gave her – which I hope will help you too! They refer to purchasing goods and services, and will help you know better what and how to buy what you need.
1. Know what exactly you need to buy. Be clear in your mind what exactly you MUST get (mandatory), and also on the nice-to-have things. In my friend's case, she must know what the mandatory technical specs of the brochure are: number of pages, dimensions, specific weight of the inside paper, specific weight of the covers, whiteness degree of inside paper, number of colors to be used, type of binding, etc. Nice to have could be things like UV coating of the covers, selective coating of portions of some pages, higher whiteness degree of the inside paper, etc. Don't buy "extra features" (that imply a higher price) if you don't need them, no matter how persuasive a supplier is!
2. Do a thorough market check on suppliers for the needed good or service. While you may know some of them, it is always better to search more thoroughly, as you may find better options that you were not aware of.
3. Select 3-5 suppliers that are the closest match to your needs. Contact the suppliers you selected at point 2 above and ask for their references (credentials) in the field you need. Then select those that you believe offer the best fit for your needs.
4. Do a VERY thorough due diligence for all selected suppliers. Spend quality time to evaluate the shortlisted suppliers from all aspects, starting with relevant references, seeing actual work delivered for other clients, but also at their financial stability (at a minimum, look at their P/L results in the past 3 fiscal years). Also, check their total business value and what %age your order would represent out of their business. For example, I would be worried to give a 50,000 Euro order to a supplier that had a total business value of 100,000 Euro in the previous year. And I would definitely not work with suppliers that had a negative bottom-line result in the past 2-3 years.
5. Write a brief that even a 10-year-old kid would understand. Never assume the supplier knows what you want! Write a brief so thorough that a school kid would understand. In this way, you will avoid misunderstandings at a later stage. I know a case when the brief for a booklet did not include all specs of the inside page, except for the specific weight. But, while the client wanted a double-coated glossy paper, it was never put in writing in the brief, so the supplier produced the booklet on singlecoated glossy paper, which looked less premium. And you can imagine the disappointment of the client with the result, but it was his fault, as the briefing was sloppy.
6. Offer suppliers the opportunity to ask clarification questions – and answer them thoroughly. In this way, you ensure all expectations are clarified, and also all technical questions from the supplier are answered. And do this in writing (you may do it in a meeting, but after the meeting, you must summarize it in writing, for the record). It will save you lots of energy and nerves if things go wrong in the implementation phase.
7. Select the winner following the BEST TOTAL VALUE concept, not on price alone. Many people want the cheapest product/service, which is not necessarily wrong, but you must be clear about what the price includes and does not include. So, besides ensuring that you get what you want from a technical specs point of view, look at delivery time, delivery place, payment terms, insurances, etc. Pay special attention to payment terms and, especially when working for the first time with a supplier, be careful about advance payments. If absolutely needed, keep them at the absolute minimum.
8. Sign a contract with the winner in which you include all technical specifications, deadlines, and KPIs, based on which you will acknowledge the goods/services receipt. A contract is highly recommended for any purchase because it is enforced by law in case the supplier messes things up. If you only base the commercial relationship on emails, for example, it may get tricky to ask for damages in a court of law. Also, include the full specs of the goods/service and penalties for partial delivery, faulty delivery, or total miss-delivery. Think about the opportunity to add a clause that covers any damages generated by the miss/faulty delivery / total undelivery, including damages to 3rd parties.
9. If you buy goods, ask for a mock-up of the goods before the supplier goes into full production. Keep this mock-up as the reference for quality for the mass production. I cannot stress this enough! In the same case I mentioned at point 5 above, the client did not ask for the mock-up, and the supplier did not offer it. If a mock-up had been asked, the client would have noticed the issue with the paper specs.
10. Also, in the case of goods, check a random sample of the produced goods against the agreed mock-up. After delivery, you must take random samples of the goods and check them against the mock-up. For example, if printed materials, check the specific weight of the paper used (this is one of the most frequent cheating methods employed by suppliers – using paper of slightly lower specific weight that you cannot notice unless you use a scale to measure the weight).
11. In the case of services delivered, whenever possible, try to use "mystery shoppers" or random, unannounced checks during the implementation of the service. "Trust is good, but control is better" was the motto of one of my General Managers at P&G. When you buy a service (for example, an in-store sampling), go unannounced to check the implementation. If you cannot do it yourself, use a mystery shopping agency.
This advice is the absolute minimum things you must do to ensure that you buy exactly what you need, at the best value possible, no matter if you need goods or services.