Source of Influencers
Internal Poorly conceived or executed procurement strategies, and poor P2P process control or systems will impact your supply, and can make strategies such as JIT for critical parts very high risk. Pricing or negotiation strategy that demands lowest cost helps to drive value out of your purchase.
External Suppliers accepting low prices, expecting more from suppliers than they have been contracted for because of over-promising/over-commitment from your supplier (also possibly due to assumptions internally).
Organisational Consequences
Operational Process errors can result in delay, errors, and quality problems; frustrations can lead to staff-churn, and inevitably the better performers will be the first to leave.
Financial Extra payments to expedite shipments, cost to rectify mistakes, cancellation of orders, and penalty-charges are all potential financial consequences.
Reputational The supplier community will be aware of your organisations payment record and process frailties; consumers may also be interested to discover how quickly you, for example, pay small businesses.
Sustainability Consequences
Social Do you pay enough? A low sell-price encourages suppliers to save wherever possible, and leaves insufficient margin to invest in improving working conditions.
Environmental Low sell-price drives suppliers to poor environmental practice, e.g. doesn't pay for permits for proper disposal of waste.
Economic Business at risk because competitors have better stock availability and delivery reliability; a stall in manufacturing output can lead to loss of revenues, loss of customer confidence, with potential effect on business longevity.
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