Buyer Behaviour - VIUBuyer Behaviour - VIU

• Purchasing at Purchasing at VIU VIU

• ConstraintsConstraints

• OpportunitiesOpportunities

• Value Value

• RelationshipsRelationships

Pareto’s PrinciplePareto’s Principle

• ““80 – 20” rule 80 – 20” rule

• Can focus on key itemsCan focus on key items

• Spend less time on non-critical itemsSpend less time on non-critical items

How Does the Purchasing How Does the Purchasing Process Work at VIU?Process Work at VIU?

• Departments determine need for Departments determine need for goods/servicesgoods/services

• Contact Purchasing Dept. to discussContact Purchasing Dept. to discuss Low-dollar value, non-contract item – proceed as desiredLow-dollar value, non-contract item – proceed as desired May need to involve Facilities Services, Health and Safety, IT, etc.May need to involve Facilities Services, Health and Safety, IT, etc. May need to request formal bids, or may simply require 3 quotesMay need to request formal bids, or may simply require 3 quotes

• Departments create requisition and obtain Departments create requisition and obtain approvalapproval

• Approved requisition comes to PurchasingApproved requisition comes to Purchasing• Purchasing issues Purchase OrderPurchasing issues Purchase Order

Dept determines need

Contacts Purchasin

g

Purchasing determines

whether other depts. need to be involved,

rigor in process required

Involv

em

en

t of o

ther

dep

ts req

uire

d?Yes

Determine if policies are

violated, H&S

concerns?

End user creates

requisition

Req approved

by appropriate person

Purchasing issues

Purchase Order

Appropriate authority

verifies

No

What Constraints do we What Constraints do we Face?Face?

• TimeTime Budgets are released at the start of the fiscal year, Budgets are released at the start of the fiscal year,

but often, spending occurs at the start or endbut often, spending occurs at the start or end

• BudgetsBudgets The budgets may be small in certain areas, so no The budgets may be small in certain areas, so no

matter how good a product looks, it may not be matter how good a product looks, it may not be possiblepossible

• Existing ContractsExisting Contracts We may have contracts in place that prohibit We may have contracts in place that prohibit

purchasing certain products from alternate sourcespurchasing certain products from alternate sources

More ConstraintsMore Constraints

• Legislation and Trade AgreementsLegislation and Trade Agreements Agreement on Internal Trade (AIT)Agreement on Internal Trade (AIT) Trade, Investment, and Labour Mobility Trade, Investment, and Labour Mobility

Agreement (TILMA)Agreement (TILMA) Carbon Neutral requirement from governmentCarbon Neutral requirement from government Auditing functions (CAMF)Auditing functions (CAMF)

(Note that there are other trade agreements that affect (Note that there are other trade agreements that affect other public sector bodies, but do not affect universities)other public sector bodies, but do not affect universities)

What Opportunities are there What Opportunities are there for Sales Reps?for Sales Reps?

• Low-dollar value productsLow-dollar value products Departments can “make their own deals” on low Departments can “make their own deals” on low

dollar value purchases, provided institutional dollar value purchases, provided institutional policies or contracts are not in place policies or contracts are not in place

• One-time vs. repeat purchasesOne-time vs. repeat purchases

• P-CardsP-Cards Individuals are able to use a VIU purchasing card Individuals are able to use a VIU purchasing card

(Visa) for predetermined dollar amounts(Visa) for predetermined dollar amounts

How Can You Create How Can You Create Opportunities?Opportunities?

As a Marketer or Sales Rep:As a Marketer or Sales Rep: Do your homeworkDo your homework Check websites, know who to contact (eg. Should you go to Check websites, know who to contact (eg. Should you go to

Purchasing Dept, or direct to end users?)Purchasing Dept, or direct to end users?) Determine if catalogues are beneficial (eg. Is there a “green” way Determine if catalogues are beneficial (eg. Is there a “green” way

to distribute material?)to distribute material?) Appropriate follow-upAppropriate follow-up Book appointmentsBook appointments Some sales reps will drop in at inconvenient times – this doesn’t Some sales reps will drop in at inconvenient times – this doesn’t

help get them on the vendor list help get them on the vendor list Be ethicalBe ethical Many companies, particularly public bodies, do not accept Many companies, particularly public bodies, do not accept

invitations for lunch, golf, etcinvitations for lunch, golf, etc Don’t ask for competitor pricing!Don’t ask for competitor pricing!

Creating Opportunities Creating Opportunities Cont’dCont’d

• Get on vendor listsGet on vendor lists This is beneficial for routine purchasesThis is beneficial for routine purchases Can be notified directly of large bid opportunitiesCan be notified directly of large bid opportunities If we don’t know about you, we can’t buy from youIf we don’t know about you, we can’t buy from you

• Register to receive bid opportunitiesRegister to receive bid opportunities Websites such as BC Bid will send you Websites such as BC Bid will send you

opportunities directlyopportunities directly Company websites may post some smaller Company websites may post some smaller

opportunitiesopportunities If you don’t register, visit the websites regularlyIf you don’t register, visit the websites regularly

What Is Viewed as Value?What Is Viewed as Value?

• Value is what the University is willing Value is what the University is willing to pay for (service, delivery, etc)to pay for (service, delivery, etc)

• Waste is anything that does not add Waste is anything that does not add valuevalueAlso have “necessary” – does not add Also have “necessary” – does not add

value, but must be present (such as set-value, but must be present (such as set-up or development)up or development)

““Overquality” is not necessary Overquality” is not necessary

Offer Purchase DiscountsOffer Purchase Discounts

• Come in a variety of formsCome in a variety of formsQuantity Discounts (EOQ)Quantity Discounts (EOQ)Early payment discounts (eg. 2/10 net 30)Early payment discounts (eg. 2/10 net 30)Advance payment, cash discountsAdvance payment, cash discounts

• Are discounts worth it?Are discounts worth it?May be cheaper to buy large quantities, May be cheaper to buy large quantities,

but may cost more in the long run but may cost more in the long run (carrying cost)(carrying cost)

Expect Fair TreatmentExpect Fair Treatment

• Code of ethics Code of ethics

• Transparent processTransparent process

• Encourage biddersEncourage bidders

• Keep your company off the front Keep your company off the front page of the paper! (eg. Gomery page of the paper! (eg. Gomery Commission)Commission)

Public vs. PrivatePublic vs. Private

• PublicPublicSpending taxpayers’ moneySpending taxpayers’ moneySubject to scrutiny (FOI)Subject to scrutiny (FOI)Must be available to everyone (AIT)Must be available to everyone (AIT)

• PrivatePrivateOpportunity to earn bonusesOpportunity to earn bonusesNot subject to AIT (can exclude certain Not subject to AIT (can exclude certain

bidders)bidders)Must still comply with contract lawMust still comply with contract law

RelationshipsRelationships

• SuppliersSuppliersMutually beneficial (they need to make Mutually beneficial (they need to make

$ to stay in business)$ to stay in business)Treat suppliers well, they treat you wellTreat suppliers well, they treat you well

• Other departmentsOther departmentsAccounts Payable (ensure suppliers get Accounts Payable (ensure suppliers get

paid), Production, Shipping, etc.paid), Production, Shipping, etc.

• CustomersCustomersMust consider the end-user Must consider the end-user

(whether in-house or external)(whether in-house or external)

Questions?

Thank You!Thank You!

Chris Munro, C.P.P.Chris Munro, C.P.P.Purchasing Manager, Vancouver Island UniversityPurchasing Manager, Vancouver Island University

• Chris.Munro@VIU.caChris.Munro@VIU.ca 250-740-6230 250-740-6230

• http://www.viu.ca/purchasing/http://www.viu.ca/purchasing/