7 Ways to Avoid Costly Procurement Mistakes With Facility Management Software

Products and services are crucial components of the upkeep mechanism. Even if plants use up their resources at varied rates, eventually everyone will have to make a purchase. Maintenance, repairs, and overall operations all rely on a streamlined and efficient procurement system. When dealing with such a large sum of money, it is obvious that you need to keep a tight eye on your purchasing to make sure no mistakes are made. Where and how to begin, however, are not so obvious. Errors in the procurement process are not always obvious. It's possible that something you've come to view as routine is, in fact, a costly error you've made repeatedly over time. The only way to know you've been missing out is to actually partake in whatever it is you've been neglecting. You are not alone in your quest for knowledge, which is wonderful news. Experts in maintenance and facilities management would know a great deal about this. We've gone out to industry leaders to get their input on areas they think teams should exercise caution. Therefore, we compiled their suggestions and identified seven common yet avoidable blunders in the procurement process.

One, Vital Facts Are Wrong Organizations may use varying terminology to describe the same materials. And different plants can tailor their characteristics to work best for their needs. In an effort toward uniformity, such specific demands can be recorded inside a database of materials. It's to be expected that the items in these categories won't always match what the merchant provides. With many sources for the same component, the problem becomes much more convoluted. Finding and waiting for the correct component is a hassle that you can easily foresee. Disagreements Over Measurement Units An even more concrete instance of a discrepancy in material information between internal and vendor records is when the two parties use different units of measure. A plant, for instance, might require bolts in a range of different numbers. A minimum of two and a maximum of twelve bolts may be needed for various tasks. As a result of its versatility, the plant defines a bolt in terms of "each" as its unit of measure. In contrast, the supplier might only offer them in sets of 24 to ensure uniformity and maximize efficiency. In this situation, it's important that the buyer and seller agree on the best method to bring in the product. Price Disconnect Price differences are another type of misleading material information. It is typical practice for systems to save prices in two different ways: the current price and a moving average of the current price. The vast majority of building management software will provide a warning if the variance exceeds a certain level. While dealing with products that haven't been handled in a while or when switching suppliers, this could become an issue. It's possible that the system's projected price will differ significantly from the vendor's catalog pricing. Abolished or Outdated The problem is compounded when products become obsolete. Complications arise when the proposed alternative does not provide the same level of form, fit, or function. Most materials undergo rapid evolution between iterations due to their nature as manufactured goods. In most cases, these take the form of a switch to a newer model or a change in the model number of a cosmetic component. Alterations of this magnitude need further inquiry in some instances. Solution The best solution is to exercise control over what you can: your own data. Different vendors may offer somewhat different products. However, you can lessen the likelihood of mistakes by making sure your data is as precise as possible. Take advantage of internal part numbers if your system provides them so you can keep track of everything. It is possible to configure a single material to use several different units of measure. Last but not least, make sure your equipment BOM is correct. It's not as easy as it looks, but it's worth the work in the end. Maintaining an accurate BOM will give you peace of mind that your system is up to date. Your team will be able to move forward with procurement more easily and with fewer hiccups as a result. 2.Failure to Engage in Proactive Supplier Negotiation It's not like the typical buyer-seller dynamic where pricing are fixed and cannot be negotiated. This is still the norm in large-scale purchasing, but it is not set in stone. Several aspects will determine how adaptable your talks can be. Negotiating discounts is possible to some degree; how much so depends on the size of your company and your familiarity with its suppliers. This may include the cost, time, and hassle of waiting for a catalog to arrive, as well as the cost of shipping and, in some situations, consignment. Solution It's in your best interest to keep lines of communication open with your suppliers at all times. Seek out outcomes that benefit all sides equally. Negotiating for an early renewal is a great case in point. In volatile markets, it's important for suppliers to have a reliable customer base. If you share your intended service usage, the company can better tailor its offerings to your needs. That way, you and your provider can both meet your requirements while also reaping the benefits of lower costs. Thirdly, a failure to take a step back and look at the big picture The possibility of not getting such favorable terms from the supplier is often overlooked in discussions about such matters. The common misconception is that the goal of procurement is to save money at all costs. Suppliers are responsible for more than just the goods itself; they also offer the service of delivering it to you. This contract will cover a large range of items and endure for months, if not years. You should consider the bigger picture, the kind of partnership you would want to preserve for the foreseeable future. It's easy to acquire the impression that one-off pieces are a good deal after tallying up their individual material expenses. However, the whole business must be viewed as a complex piece of machinery. Investing in unique parts increases the likelihood of future repair costs and makes it more difficult to do repairs in a standardized fashion. The inferior quality of your products would also necessitate an increase in servicing efforts. Spending more money up front with a company who stands behind their products' durability is the best course of action. Solution Consider the two-way nature of business talks. In any negotiation, the goal should be to find a solution that satisfies all involved parties. The pricing list isn't the end of your business relationship with your suppliers. Look at the duration of your agreement and make sure you understand all of the terms and conditions that apply to your business. Costs should be seen as an investment in quality that will yield a positive return. Lackluster use of available technological resources Subscribing to facilities management software to keep tabs on purchases is becoming standard practice for many businesses. Even with state-of-the-art procurement technologies, it may take some time for employees to break old behaviors. There are two primary reasons why people don't maximize their use of technology: they either don't use the available tools or they flat-out reject all of them. Not Making Use of Current Resources It's a common misconception that upgrading an organization's software would magically fix all of its problems. There is some truth to this, but it is also some falsehood. You can solve your issues with today's software, but it won't come cheap. It's not necessarily only a monetary cost, either. There are times when only a great deal of time, energy, and plain old graft will do. Data is the lifeblood of any technological system. You must provide accurate data for your program to function as intended. Get in touch with your service provider so that you can conform to the requirements of the program. It may be necessary to organize and purge old files, adopt a uniform data format, or provide education and guidance to end users. No of the preconditions, it's always a good idea to get in touch with your provider to learn the ropes. A Denial of Modern Technology New facility management software, like anything novel or unfamiliar, can raise eyebrows and cause concern. Who would want to give up the security of the status quo? The potential for unexpected expenditures is another typical factor in people's hesitation to try anything new. The truth is that there may be a great deal of ambiguity, but there may also be some promising openings. These possibilities, along with the persisting uncertainty, need to be said aloud. Having a flexible mindset is beneficial when considering many options. Solution Before attempting to solve a problem, it's important to sit back and assess your available options. Make contact with your supplier if you already have access to a procurement system. Use the system to its fullest extent. You should learn about all of its features and make mental notes of the ones your group might benefit from. In addition, look for ways to enhance your current procedures. Also in this boat are businesses that are on the fence about outsourcing their IT needs to an outside vendor. The key is to know what you can do. Check out the options that service providers offer and decide if their services make sense for your business. To be more precise, you can calculate the potential value of any upgrades and then evaluate them against the price of the service. 5 - Deciding to Go with Cheaper, Lower-Quality Options There is a common expectation that facilities managers would control the budget. Finding the cheapest option is the most obvious strategy to save money, but it may also be the most frightening. Intuition and experience will tell you that's a bad plan. There are worries about choosing the least expensive choice. The biggest one is lowering standards. Although short-term cost savings are possible, you could end up losing much more in the long run if you decide to cut corners. By doing so, you endanger not only the success of your business but also the safety of your employees from easily preventable dangers in the workplace. Especially for materials that don't seem to demand high requirements, opting for inferior quality for low costs may seem like a tempting alternative. In any case, keep in mind that the plant as a whole is a system made up of various parts and pieces. You may be exposed to huge dangers that you are unaware of because of a single weak link in this so-called chain of activities. Solution Get to know your vendors and manufacturers better. Knowing more about the product you're purchasing can help you rationalize spending more money on it rather than going with the least expensive option. Consider your materials' intended function and whether or not they fit into any wider critical systems. Identifying your risks will help you determine the true cost-benefit of upgrading to superior materials. Sixth, Reducing Standards Without Approval or Review In continuation of the preceding point, failing to account for necessary specs is another typical blunder while making a purchase. Several factors may have contributed to this omission. There may be an upcharge for the order if other requirements are added. Some suppliers may levy additional fees for things like material certifications, calibration certificates, and superior safety measures. Sometimes, a vendor won't be able to provide a specific item listed in their catalog, so they'll have to offer a close substitute instead. Solution Recognizing the possibility of such situations and the necessity of a review process are the first steps toward solving them. One possible example is a company that has a dedicated team member whose duty it is to evaluate the performance of replacement parts. Procurement processes have built-in checks and balances to prevent the release of goods or services that do not adhere to operational and safety standards.

7. Poor Documentation

There is an unbelievable amount of materials that a typical plant requires to sustain its daily operations. Companies have to rely on their facility management software records to keep track of all the traffic of materials that come and go. If the records don't allow for searches to be performed easily, workers don't have a chance to find the part they require.

Take it from our experience of working with many facility managers. You might have the parts you urgently need for a job, but without a way to know that you have them in stock, you cannot put them into use.

Solution

It seems like we've come full circle as avoiding procurement mistakes all goes back to keeping records as accurate as possible. When cataloging materials, keep in mind that you want the records to be functional and practical. Put in enough detail in your material data to allow them to be identified and searched. In the example above, it might help to break down the individual components of kits. Add in your relevant part numbers, and give your workers a better shot at finding the part.

Conclusion

The procurement process is more than just creating a purchase order. It involves a series of steps that bridge the requirements of the plant to what suppliers have to offer. By thinking about how materials are used throughout the plant and considering everyone involved, procurement processes can be improved, made more effective, and free of mistakes.

This article was first published here