How to Initiate a Purchase
Forecast your departmental needs for goods and services as far in advance as possible. Some vendors need four weeks or more to process an order. “ASAP” orders increase costs and administrative workload. For orders in the amount of $10,000 or more, a Requisition to Purchasing form must be submitted to initiate a purchase order. The use of a college procurement card is strongly encouraged for orders that do not require a purchase order.
Requisition forms should include the following information:
- Suggested Vendor (Procurement maintains the colleges preferred vendor list)
- Department Account Number and Object Code to Charge the Expense to
- Quantities and Detailed Specifications for all Goods and/or Services
- Unit Cost(s), Shipping and Other Miscellaneous Charges
- Approval by an Authorized Departmental Approver
Note: All orders over $10,000 require bids from a minimum of three vendors.
Verify the quantity and quality of your order when you receive it. If your order is incorrect, or if you are returning any items, immediately inform Procurement. Doing so prevents overpaying the vendor and overcharging your department's budget.
Why Purchase Orders Are Necessary
A purchase order assists budget management. Following procurement procedures results in spending your department’s budget most effectively. Purchase orders also create a budgetary commitment, which helps to prevent an unexpected shortage of funds at the end of the fiscal year. A purchase order also is necessary to track orders.
Following procurement procedures generally results in faster delivery times and prompt payment of your orders because a purchase order is the only way Procurement, Receiving, Mail Services, and Accounts Payable can track your order. A tremendous workload is created for each of these departments when an order is placed without following the procurement procedures. A purchase order, procurement card, or check request are the only authorized methods of purchasing goods or services for the College.
Do not make any commitments of Babson College funds yourself by placing an order or signing a contract without following procurement procedures. You could be held legally liable and responsible for payment of unauthorized purchases. Note that an “after-the-fact” purchase order cannot be issued after placing an order with a vendor. Purchase orders are not required for purchases under $10,000—for these transactions use of the procurement card is very strongly encouraged.
Procurement approves a requisition by confirming that adequate information, specifications, and backup information are included. Procurement will contact the department if additional information is necessary.
Negotiation with Vendors
Negotiation is a bargaining process involving a purchaser and a supplier. The ability to negotiate is a skill that purchaser’s must develop to obtain:
- A fair and reasonable price
- Needed quantities and quality
- Sound and continuing relationships with suppliers
Effective negotiation and renegotiation skills are critical for everyone, especially when facing the new economic realities of today’s business environment.
Tips to better negotiations with existing vendors in these challenging economic times:
- Many times a vendor will increase their price for the same service they supply annually. Simply ask the vendor to provide an itemized list to justify the increase. You can tell them the Procurement Department is requesting this information.
- Another approach is to explain to the vendor that due to the economic realities of today’s business environment we are asking them not to increase our cost. Remember that these vendors are thrilled to have Babson’s repeat business and in many cases they will respond positively to your request.
- Ask for deeper discounts when adding additional services or increasing product quantity.
- Question additional fees. If you are uncomfortable with an amount of a fuel surcharge or a delivery charge ask the vendor how they arrived at the cost. If gas prices are down, why has the fee increased?
- Be informed. Current and projected economic conditions will affect price and availability.
- Remember that honesty is the best policy. Let the vendor know if you are not satisfied with a product or service.
Negotiation need not be confrontational. The best agreement is one that is well balanced, where both parties are comfortable with the final outcome. Contact the Procurement Department for additional information.
Vendor Selection and Competitive Bid Requirements
Vendor selection is a major responsibility of the procurement process and requires a consideration of many factors. For purchases over $10,000, Procurement requires bids/quotations from a minimum of three vendors. There are very rare cases when only one vendor can provide the specific goods or services needed. These cases must include back-up documentation substantiating that the vendor is a sole source.
Babson Procurement and Contracting Process
When selecting a vendor, Procurement considers quality, cost, delivery, terms, past vendor performance, and the following criteria:
- Vendors must demonstrate their ability to supply goods and services on a regular and timely basis under varying market conditions.
- Vendors must demonstrate the ability to procure adequate supplies of raw materials.
- Vendors should be cost competitive.
- Vendors should demonstrate the ability to meet both the specification requirements and applicable industry standards.
Additional consideration may be given to vendors that meet the following criteria:
- Vendors who are developing new products or services, or developing a special product for the college’s exclusive use.
- Vendors with adequate financial strength and a reputation for adhering to specifications and delivery schedules.
- Vendors located near the College.
- Vendors, or their representatives, that have helped advance the educational goals of the College.
- Vendors that support the College’s Affirmative Action Policy.
In accordance with policy, Babson College does not reveal specific pricing or other information associated with bid processes or other business activities. Vendors are requested to propose their most competitive offer upon first submittal as these are considered best and final offers.
Purchase Order Issuance
After the requisition is approved, Procurement issues a purchase order to the selected vendor. A purchase order contains all the order information from the requisition and permits the vendor to process and ship the order. Purchase orders are sent by email, fax, or mailed out of Central Services on a daily basis. Procurement will email the purchase order number to the requestor once it has been assigned.
Delivery of the Order
Central Receiving accepts all orders delivered to Babson College. Once an order is received and verified against a purchase order, Accounts Payable records the order as received in the financial accounting system. Mail Services then delivers the order to your department. Orders are generally delivered within 24 hours of receipt, provided all purchasing procedures are followed. Your department is responsible for verifying the quantity and quality of each order when delivered. If your order is incorrect, or if returning any items to the vendor, immediately inform Procurement. Doing so prevents overpaying the vendor and overcharging the department’s budget.
Payment of the Order
If procurement procedures are followed, Accounts Payable pays for the order within Babson College’s payment terms, 2/10, net/30. Accounts Payable will question all bills that cannot be associated with an authorized purchase order. They also will question any expense reports that include the purchase of equipment, software, or other goods and services that would normally require a purchase order.
Where to Ship the Order
All shipments for goods must be received through the College’s Central Receiving operation. Please give the following information to vendors as the Ship to Address:
ATTN: (your name or department / the purchase order number)
231 Forest Street
Babson Park, MA 02457-0310