Asset procurement and purchasing risks

Do you have risks in your asset procurement and purchasing processes?

Asset procurement and purchasing risk is the potential for failures of a procurement process. Designed to purchase services, products or resources. Common types of procurement risk include fraud, cost, quality and delivery risks.

In many cases, procurement risks are also compliance risks and the potential for failures in a procurement process results in business losses and disruption.

Conservative estimates that procurement errors (purchasing the wrong product, purchasing the product for a higher price) and a lack of controlled procurement can easily add up to an average 10% ‘error’ cost across all purchase transactions.

Asset procurement and purchasing risks and likely consequences

RISK: understatement of the need
  1. Purchase of unsuitable product and/or service
  2. Money wasted
  3. Need not satisfied
RISK: overstatement of the need and/or misinterpretation
  1. Greater expense
  2. Poor competition
  3. Totally unacceptable purchase
  4. Time lost
  5. Increased costs
  6. Possible downtime
RISK: insufficient funding and impractical time-frames
  1. Delay in making the purchase
  2. Additional costs for re-tender
  3. Inadequate responses from tenderers
  4. Reduced competition
  5. Delivery schedule not met
RISK: probity issues
  1. Iccreased procurement costs
  2. Misuse of resources
  3. Most suitable product not obtained

Integrating budgeting, purchasing and asset management in one system

Complete control of your procurement process starts at the purchase order and goods delivery, through to deployment, re-deployment and final disposal.

It is essential to have an end to end purchasing solution that delivers enhanced intelligence of past, present and pending asset acquisitions and procurements such as:

  • Accurately analyse need
  • Verify purchase requests from around the company
  • Contract negotiations; improve consultation with users and suppliers
  • Obtain appropriate approvals before undertaking process
  • Administer contracts that have a longer duration
  • Improve forecasting and planning
  • Improve communication with potential tenderers
  • Implement best practice policies, guidelines and practices
  • Maintain an ethical environment
  • Disposal of waste products like the packaging

By entering purchase order information directly into your asset register, system users can see at a glance what assets are on order, their cost, what has been received and those overdue. Every step, from budgeting, requisition request, requisition approval, purchase order, goods delivery, to invoicing and conversion of PO items into assets, stock/inventory or services.

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Improved budget control and productivity

Match your available expenditure to your procurement schedules and trigger alerts as thresholds are met, so you never over order or go over budget again. With the automation of administrative tasks across the entire procurement solution, as well as pre-defined processes, permissions and simplified re-ordering, you can significantly improve your operational efficiency and budget control.

  • Inventory control
  • Asset management and financial planning
  • Audit procedures & accurate audit trail
  • Purchasing information
  • Create linkages between items and vendors
  • Equipment planning and replacement management
  • Maintenance & warranty information
  • Labour and administration costs
  • Insurance and disaster recovery costs
  • Optimum asset utilisation

Hardcat software solutions take control of all your asset/inventory and stock and assists in growing your business.

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  • Karina

    Thanks for the post about asset procurement and purchasing riѕks, this really helps!

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