Purchase Order Series, Contracts

Purchase Orders and Avoiding Procurement Hell – Part 1

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Recently a client called asking us to quickly review a purchase order—while the amount was small, the next order was to be just under $500,000. And, oh yes, the multinational buyer would not budge on the purchase order –our client just wanted to know what to look out for.

How do you handle a “nonnegotiable” purchase order from a global behemoth? And when that one page, front and back PO, really contains 14 pages of text when printed out at human sized font? (We kid you not).

We have 3 recommendations on how to handle this situation that we’ll explore in several posts.

First, is it really nonnegotiable? Purchasing departments are trained to robotically repeat that there is no negotiation. Behind that robot, there is a person. Don’t go for the jugular and ask them right off the bat—how can this P.O. be nonnegotiable?

Rather, ask them questions about their work, what areas of the company they cover. Ask them what things suppliers or service providers can do to make their life easier. Take any opening you see to talk to them about themselves beyond work. Weather, location, and family are usually easy entrees into relating to them on a personal basis. Only after you have had some human conversation can you start asking about how flexible can they be regarding this purchase order and what workarounds might there be.

If they positively, absolutely insist that no one ever gets paid without this P.O., ask them if there are other agreements that usually accompany or coexist with that P.O. Whether they say no (take that with a grain of salt) or they say yes, your next step is to the business person pushing your project or needing your goods. Prepare for Round 2 in the next post.
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