The Five Rights of Purchasing
Like so many industries and specialties around us, purchasing continues to change. If you studied purchasing not that long ago (or perhaps your manager did and they sent you on this course), you may have learned something called “The Five Rights of Purchasing.” This principle says that every purchase has to reflect the key objectives of the right quality, in the right quantity, from the right source, at the right time, and at the right price.
- This model is based on transactions. However, the concept we now focus on is related to relationship development rather than transactions.
- The price principle is always listed last, as if price is the only conversation left after the other factors are agreed upon. However, procurement is not about a trade-off, where if we agree to a lower quality or a longer time frame, the item would necessarily cost less.
- Always think about the relationships you are developing with suppliers, stakeholders, and your customers.
Instead of the previous interpretation of “rights” purchasing, we feel that a contemporary view has to include elements of internal operations, sustainability, risk management, and stakeholder engagement.