EARLY WARNING - All About Procurement Fraud - Part 4

    

EARLY WARNING

All About Procurement Fraud – Part 4


By Nikki Viljoen – Viljoen Consulting February 2013.

Last time we looked at some of the different types of issues that need to be looked at around procurement. 

Today we will have a look at some more.

As we said one of the ways to limit procurement fraud is to ensure that you have a proper procurement policy in place and that it is adhered to and checked on a regular basis. We looked at the Needs Analysis, Timing and Suppliers.  Other issues that need to be taken into account when implementing the procurement process are (but not limited to):

1.    Supplier Communication
Once you have sourced the supplier, irrespective of whether you have one supplier for each product or several suppliers, you need to obtain quotes and/or ask for a proposal.  It may be that you require additional information pertaining to the product and where it was sourced (for the Eur1 certificate if applicable).  It is important to have the correct contact details of the person that you will be dealing with in order to establish a food working relationship.

If this is a new supplier that you are considering, it is a good idea to get references (which of course must be checked properly). You may require samples so that you can check the quality or find out who to speak with when you have issues around repairs or maintenance or installation etc.  You may what to test samples so need both new and used products in order to conduct same.

Clearly the better the lines of communication the successful the relationship will be, remember to be clear in your expectations and requirements.

2.    Negotiation
I always say that assumption, perception and expectation are the three most dangerous words in the dictionary because they seldom meet reality!

The reality of course is that there will always be negotiation.  The client always wants to pay less for the goods and the seller always wants to sell more products for more money.

Make sure that your expectations are fair and clear.  Is the price right, are the goods readily available and if not what are the time lines for delivery?  Are the products standard or do they have to be customized and if so what does that entail? Delivery schedules should be put into place as well as payment schedules.

If you need to test certain products to ensure quality etc., then this also needs to be documented into your process as well as what the physical tests are as well as what the acceptable levels are in terms of the quality and functionality of the product.

Next time we will have a look at a few more steps that need to address in your procurement process.

Nikki is an Internal Auditor and Business Administration Specialist who can be contacted on 083 702 8849 or nikki@viljoenconsulting.co.za or http://www.viljoenconsulting.co.za