The Supplier Who Wants to Skip the Paperwork
You are the purchasing officer at a regional equipment supplier. A new stationery vendor, Larkfield Supplies, has quoted $4,800 for an order that must be delivered by Friday to fulfil a client contract. Larkfield is not yet on the organisation's approved supplier list. The normal process requires three written quotes, a completed supplier registration form, proof of insurance and a credit check before a purchase order can be raised. The vendor's sales representative says he can deliver Thursday if you 'just send a verbal go-ahead and sort the paperwork later', and adds that he will knock $300 off if you pay a 50% deposit by bank transfer today. Your manager is on leave until Wednesday, and the client contract has a penalty clause of $500 per day for late delivery. The approved supplier you usually use cannot deliver until the following week.
1. Evaluate the options available to you and recommend a course of action, referring to procurement and financial controls. (7 marks)
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The core tension is between a commercial deadline (Friday delivery, $500/day penalty) and the organisation's procurement and financial controls (approved supplier list, three quotes, insurance, credit check, purchase order).
Options:
- Accept the verbal go-ahead and pay the deposit. Fastest, but it bypasses the approved supplier list, skips the insurance and credit check, and commits organisational money without a purchase order. If Larkfield is uninsured or fails to deliver, the organisation bears the loss and you have acted outside your authority. A verbal commitment can still be legally binding, so 'just a verbal' is not low-risk.
- Do nothing and wait for the manager. Safe on controls but almost guarantees a late delivery and a penalty of up to $500 per day, and leaves the client contract exposed.
- Escalate and run the checks in parallel. Contact the manager (or the delegated acting manager) by phone to seek approval for an expedited process, while simultaneously requesting Larkfield's registration form, insurance certificate and credit details so the checks are ready when approval arrives. Ask whether a conditional or one-off purchase order can be raised for this supplier.
- Explore alternatives. Ask the existing approved supplier about a partial or split delivery, or check other approved suppliers, to reduce dependence on Larkfield.
Recommendation: escalate for approval and run the compliance checks in parallel. Do not send a verbal go-ahead or pay a deposit before a purchase order exists. The $300 discount is not worth uninsured, uncontrolled spend, and a deposit by bank transfer to an unregistered supplier is a fraud risk. If approval cannot be obtained in time, document the decision and the reasons so the organisation can manage the penalty with full information.
2. The manager approves Larkfield on a one-off basis on Wednesday, but delivery slips to Monday. Outline your next actions and what you would record. (4 marks)
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Next actions:
- Notify the client and the account manager immediately that delivery will be Monday, with a revised date, so the client can plan and the penalty exposure is managed openly rather than discovered.
- Confirm the new date in writing with Larkfield and request a delivery confirmation; keep the approval and correspondence on file.
- Raise or amend the purchase order to reflect the actual delivery date and terms, and ensure payment is only made against the purchase order and a delivery docket - not on the vendor's word.
- Record the incident: the original deadline, the reason for the one-off approval, the slippage, the penalty incurred and the corrective action. This record supports any penalty negotiation and informs whether Larkfield should be added to the approved list in future.
Recording matters because procurement decisions must be auditable: if there is a dispute over the penalty or the payment, the file must show who approved what, when, and on what basis.