Buyer Behaviour VIU Purchasing at VIU Constraints Opportunities

Buyer Behaviour - VIU • Purchasing at VIU • Constraints • Opportunities • Value • Relationships

Pareto’s Principle • “ 80 – 20” rule • Can focus on key items • Spend less time on non-critical items

How Does the Purchasing Process Work at VIU? • Departments determine need for goods/services • Contact Purchasing Dept. to discuss Ø Low-dollar value, non-contract item – proceed as desired Ø May need to involve Facilities Services, Health and Safety, IT, etc. Ø May need to request formal bids, or may simply require 3 quotes • Departments create requisition and obtain • • approval Approved requisition comes to Purchasing issues Purchase Order

Dept determines need Appropriate authority verifies Req approved by appropriate person Determine if policies are violated, H&S concerns? End user creates requisition Yes No Involvement of other depts required? Purchasing issues Purchase Order Contacts Purchasing determines whether other depts. need to be involved, rigor in process required

Key Constraints • Time Ø Budgets are released at the start of the fiscal year, but often, spending occurs at the start or end • Budgets Ø The budgets may be small in certain areas, so no matter how good a product looks, it may not be possible • Existing Contracts Ø We may have contracts in place that prohibit purchasing certain products from alternate sources

More Constraints • Legislation and Trade Agreements Ø Agreement on Internal Trade (AIT) Ø Trade, Investment, and Labour Mobility Agreement (TILMA) Ø Carbon Neutral requirement from government (Note that there are other trade agreements that affect other public sector bodies, but do not affect universities)

Opportunities for Sales • Low-dollar value products Ø Departments can “make their own deals” on low dollar value purchases, provided institutional policies or contracts are not in place • P-Cards Ø Individuals are able to use a VIU purchasing card (Visa) for predetermined dollar amounts

Creating Opportunities As a Marketer or Sales Rep: § Do your homework Ø Check websites, know who to contact (eg. Should you go to Purchasing Ø Dept, or direct to end users? ) Determine if catalogues are beneficial (eg. Is there a “green” way to distribute material? ) § Book appointments Ø Some sales reps will drop in at inconvenient times – this doesn’t help get them on the vendor list § Be ethical Ø Many companies, particularly public bodies, do not accept invitations for lunch, golf, etc

Creating Opportunities • Get on vendor lists Ø This is beneficial for routine purchases Ø Can be notified directly of large bid opportunities Ø If we don’t know about you, we can’t buy from you • Register to receive bid opportunities Ø Websites such as BC Bid will send you opportunities directly Ø Company websites may post some smaller opportunities Ø If you don’t register, visit the websites regularly

Demonstrate Value • Value is what the University is willing to pay for (service, delivery, etc) • Waste is anything that does not add value ØAlso have “necessary” – does not add value, but must be present (such as set-up or development) Ø“Overquality” is not necessary

Purchase Discounts • Come in a variety of forms ØQuantity Discounts (EOQ) ØEarly payment discounts (eg. 2/10 net 30) ØAdvance payment, cash discounts • Are discounts worth it? ØMay be cheaper to buy large quantities, but may cost more in the long run (carrying cost)

Fair Practices • Code of ethics • Transparent process • Encourage bidders • Keep your company off the front page of the paper! (eg. Gomery Commission)

Public vs. Private • Public ØSpending taxpayers’ money ØSubject to scrutiny (FOI) ØMust be available to everyone (AIT) • Private ØOpportunity to earn bonuses ØNot subject to AIT (can exclude certain bidders) ØMust still comply with contract law

Relationships • Suppliers ØMutually beneficial (they need to make $ to stay in business) ØTreat suppliers well, they treat you well • Other departments ØAccounts Payable (ensure suppliers get paid), Production, Shipping, etc. • Customers ØMust consider the end-user (whether inhouse or external)

Thank You! Chris Munro, C. P. P. Purchasing Manager, Vancouver Island University • Chris. Munro@VIU. ca 250 -740 -6230 • http: //www. viu. ca/purchasing/