Purchasing guidelines are used to create binding rules for the procurement of all goods in a company. These rules reduce inefficiencies in purchasing and improve the company’s results. For example, clear roles and responsibilities can be defined, supplier selection can be standardised and processes can be made transparent, documented and improved. Furthermore, purchasing guidelines contribute to the fact that purchasing is perceived more strongly than before as a strategic success factor of a company. In large companies, the conception of such a guideline involves a considerable amount of work. In small and medium-sized companies, it is sufficient to agree on a relatively small number of rules and regulations to which all employees must adhere.

  1. concrete examples

By adhering to purchasing guidelines and bundling orders with a few suppliers, you as a company can easily achieve 5% to 10% savings because higher discounts and better conditions can be achieved.

Furthermore, savings in purchasing have an enormous leverage effect and are immediately noticeable and measurable in the company’s results. Thus, a reduction in purchasing costs also has a considerable impact on the rating result and credit conditions.

The following examples show the positive effects that can result for your business.

Example 1 – Higher discounts possible: A company has an annual purchasing volume of € 3 million without discounts. Because there are no specifications for purchasing, each employee can order as needed. Currently, goods are ordered from more than 15 suppliers who offer discounts of 5% on average. This means that the company has to pay €2.85 million per year for purchased goods. To achieve even greater savings, the company is improving its purchasing structures and introducing binding purchasing guidelines. Among other things, these stipulate that purchasing employees may only order from five named suppliers and that regular negotiations must be held with suppliers.
By bundling orders and negotiating, discounts averaging 8% can be achieved. This means that – with otherwise unchanged conditions – only €2.76 million will have to be spent on the procurement of goods. In the ideal case, if there are no changes in sales and other costs, profit thus increases by € 90,000 (€ 2.85 million – € 2.7 6 million).

Example 2 – Optimization by taking advantage of cash discount: Previously, no cash discount was granted by suppliers. By concentrating on a few suppliers and regular negotiations, it was possible to achieve that a cash discount of 2% may be taken in all cases. In relation to the purchasing volume of € 2.76 million, this results in further savings of more than € 55,000.

  1. simple purchasing guidelines for SMEs

Below you will find an overview with suggestions and ideas for purchasing rules, divided into

  • Purchasing and procurement,
  • Delivery and storage and
  • Rules for supplier selection

The rules do not claim to be absolutely complete. Rather, you must at least partially adapt the suggestions to the requirements and processes of your company. To do this, you can, for example, delete or change points or add new rules. Possible alternatives and additions to the rules can be found in the right-hand column.

It is important that all employees receive the rules. In addition, you must announce from when the rules apply and that all employees are obliged to comply with them. At the same time, you should check whether sanctions will be imposed in the event of violations, such as warnings or cautions. Here you should definitely talk to a lawyer in advance and involve the works council if necessary. The rules should be reviewed annually and adapted and supplemented if necessary.

Rules for purchasing and procurement

  1. The purchasing rules apply to every procurement of goods and services. Additions may be necessary, for example: The rules also apply to assembly, maintenance and spare parts.
  2. All orders are placed centrally and exclusively in writing via the purchasing department. Alternatively/supplementary: Each department can purchase office supplies/consumables and the following materials itself (Important: Specify all goods to be procured freely in order to avoid misunderstandings). Orders must also be placed in writing.

If necessary, name departments and contact persons, draw up a list of goods to be procured centrally and decentrally and update it every three to six months.

Note: Depending on the IT equipment, orders via EDI or Web EDI may also be considered “in writing”.

  1. Purchase orders and the commissioning of purchasing may only be made by the head of department and his/her representative. Alternatively, name persons for each area.
  2. The purchasing department and the orderer must sign each purchase order.
  3. The following data must be available for each order: Article, article number, order quantity, desired delivery date, if necessary with dates for partial deliveries, department, if necessary delivery address, order date and orderer’s signature. If possible, use a form for orders with all requirements, in which additional points are listed, e.g. delivery locations for companies with several locations, cost centre of orderer or account assignment data.
  4. For orders exceeding an amount of X €, two (three) offers must be obtained. This also applies if several partial orders result in the total amount being exceeded.
  5. Orders for office supplies and consumables may only be placed with companies X and Y with which there are framework agreements. Useful to negotiate higher discounts for standard goods and to simplify invoicing.
  6. All contracts necessary for procurement are concluded by the purchasing department, which informs any decentralised procurers. If necessary, name the departments or persons who may purchase decentrally, e.g. IT or sales.
  7. Free” purchasing without contracts is only permitted in exceptional cases. Affected employees will only be reimbursed for their expenses if they submit invoices/receipts that meet the legal requirements. Specify exceptions, e.g. if tools or materials are needed at short notice for on-site assembly at the customer’s premises. If applicable, describe which requirements receipts have to fulfil in concrete terms.
  8. If cash discounts are offered, there is an obligation to use them without exception. The receipts and information are to be forwarded to the accounting department without delay. See also rules for delivery and storage.
  9. Each orderer undertakes to check whether goods or stocks are still available before placing an order in order to keep inventories low. If necessary, a corresponding note can be provided on the order forms.

Rules for delivery and storage

  1. Each delivery is checked for completeness and externally visible defects by means of an incoming inspection. In addition, a comparison is made between the order and the delivery (delivery bill). In particular, the following are checked: Quantity, type of goods, prices, conditions and packaging damage.
  2. For all centrally procured goods, the purchasing department takes over this check. Alternatively: The ordering department carries out the check.
  3. For all decentrally procured goods, the ordering department takes over the inspection.
  4. In the case of external defects or incomplete delivery, the supplier/freight forwarder must confirm this in writing, otherwise acceptance of the goods will be refused.

Note: For this and the next rules, the procedures of the respective company are to be reflected. There may be major deviations from the suggestions.

  1. Information about defects or refused acceptance goes to purchasing and accounting. Purchasing/ordering requests the supplier to rectify the defect; accounting checks whether a reduction or suspension of the invoice amount is possible.
  2. Goods that have survived the receiving inspection are checked and recorded in the warehouse; the correspondence between the delivery note and the goods receipt is confirmed. If not already done, the purchasing department and the orderer are informed about the receipt of goods.

In particular, the goods are checked for defects, if this is not possible during the incoming goods inspection due to packaging, quantities, weight, etc.

  1. In the event of incomplete or defective delivery, the supplier shall be requested by the purchaser/buyer immediately in writing and with a specific deadline for subsequent delivery or defect-free delivery. Here, too, the accounting department will be informed for the purpose of reducing the invoice, etc.
  2. Each receipt of goods shall be reported to the Purchasing Department without delay; necessary documents shall be made available to the Purchasing Department after the inspections. The purchasing department forwards the documents to the accounting department without delay. Errors that entitle to service reductions are also reported to the accounting department.

Alternatively: Every goods receipt is reported (also or first) to the accounting department.

  1. When the invoice is received, the purchasing department/accounting department/ordering party check the conformity with the delivery and, if necessary, the conditions.
  2. A precisely defined time window for the delivery of goods is agreed with the suppliers. Deliveries outside the time window can be refused.

Background: Saving of working time and coordination effort.

Rules for supplier selection

  1. The cooperation with suppliers is long-term in order to achieve a permanently high standard in terms of quality, adherence to delivery dates and conditions. The careful suitability check of suppliers is therefore of great importance. The supplier audit is repeated annually in order to secure and expand the standards that have been achieved.
  2. The products or services to be supplied by each supplier are defined. Minimum subdivision: materials/raw materials and office supplies/consumables.
  3. The decision for a supplier must not be made solely on the basis of price and conditions. Each (new) supplier is also tested and obliged to comply with the following points:
    • Quality, adherence to delivery dates,
    • exchange/guarantee behaviour,
    • environmental commitment/sustainability and
    • Acceptance and, if necessary, disposal of packaging and containers.

Add to the list if necessary. In addition, it is necessary to describe what is meant by each point. Quality can mean, for example, that the supplier complies 100% with all specifications and requirements.

  1. Supplier screening and selection is carried out by the purchasing department (alternatively: management).
  2. Each supplier has a personal contact person who can be contacted in case of orders, problems and negotiations. If the contact person is absent, substitutes must be named in good time.

If necessary, specify when the contact persons must be available and the times during which enquiries or orders are to be processed.

  1. Suppliers are obliged to notify planned changes in good time (at least three months before they come into force).

Specify the period of time contractually and, if possible, measure it in such a way that it is possible to switch to alternatives.

  1. Suppliers are obliged to report identifiable bottlenecks immediately. Contractually agree on sanctions in case of violations, if applicable.
  2. All agreements must be concluded in writing; verbal agreements are only valid if confirmed by the purchasing department.
  3. Every offer is checked by the purchasing department; in case of doubt, a lawyer is to be commissioned with the check.
  4. At least one alternative supplier must be available for each supplier.

All information and details in our articles and information have been compiled to the best of our knowledge. However, they are provided without liability. This information cannot replace individual advice in specific cases.

Link to the german version: https://thevisionworks.de/einkaufsrichtlinien