Do you require Purchase Orders for services such as consulting and legal, or do you accept these as non-PO spend?
In my opinion all spend should be PO based as the migration to data analysis requires accurate information with as much granularity as possible. Irrespective of spend the understanding of this spend value could assist years down the line in making key recruitment decisions, etc. Also ensuring there is a PO will result in the spend being an auditable item and not go under the radar if only a certain portfolio is evaluated.
Hi Marion. In my opinion and experience is better to have everything backed with a PO. It helps in many levels: book keeping, transparency (very important), proper cost allocation and also helps to set baselines for the future. Hope this helps.
Yes, a PO, or in this case, a Service PO is required. These cannot be regarded as non PO spend. It does require capital expenses from the company after all. These indirect costs incurred (for specific projects or otherwise) can rack up to a rather large amount in some cases.
Having a PO, or if your current system allows, a Service PO, has several advantages:
1) Proper capturing of costs related to whatever category it falls under,
2) Provides an audit trail and documented procurement history
A Service PO also has the advantage of tracking amendments and changes that may occur during the execution and duration of such services. In my experience, consulting and legal services do undergo changes in the original scope of requirement (service level agreement). A Service PO allows you to add in additional comments to track the changes at each different revision order(s).
This makes it easier for your own referencing as well, rather than dig through a pile of contracts and addendum. Its also easier to revise a Service PO compared to drafting up an entirely new contract as well.
Of course, all these will need to be able to integrate into your current procurement system and workflow. As long as it makes it easy for you to track, maintain, provide internal compliance and gives you a logical path of progression, do give it some thought implementing it.
Hi Marion, I hope all is ok with you.
Depends a lot on the spend you manage and how you would like to focus on these areas.
Having a PO or a contract would be basic for almost all spend and could help mitigate several risks, assure proper requirements is filled and could help to move this in the future to proper category management.
You need to understand the options, cost and risks to make this decision. What would be outputs and risks for having a PO and what would be the same for not having a PO.
If you are whiling to move to a non-po scenario, I would recommend at least have a contract with the suppliers involved.
Consulting and Legal services could represent an important spend and would be best if proper managed by Procurement. Of course, not all Legal and consulting would be able to adapt to closed specifications or requirements but if the spend is important you could at least address part of it and generate value to your organization.
Hope it helps and happy to go further if you wish
I prefer PO versus the old "check request" as it gives better visibility to what we actually pay those types of vendors. Legal and Finance do not see it the same way but it is usually a large amount of spend that is "off the radar" without PO's in place