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In this guest post, ASM Technologies' Iain Tomkinson argues that procurement cards can mute the impact of supply chain and purchasing strategies.
Procurement cards are as popular as ever. While they serve a purpose – providing a relatively easy way to make low value, high volume purchases, or for transacting with suppliers which only accept credit card payments - they are far from perfect.
The issue with procurement cards is that they create more problems than they actually solve, and there are better alternatives on the market today. Their overriding benefit – to make small transactions relatively more convenient – is easily outweighed by the numerous new problems they add to any organisation that uses them.
I see four main issues with procurement cards:
Each one of these issues is significant in and of itself, but when combined and then multiplied by the many hundreds or even thousands of procurement cards operating within the organisation, can result in significant waste.
In most instances organisations are better off negotiating unique trading relationships directly with suppliers or resellers that mimic the convenience of a procurement card (such as the ability to make transactions without POs, pre-approved spending limits for individuals, etc.). Such a relationship will not only deliver the same convenience of a procurement card, but will eliminate all of the issues listed above. If such a relationship is established with a reseller with a significant supplier portfolio, rather than with a single vendor, you won't need to establish too many relationships to secure this benefit quickly.
Iain Tomkinson is director, ASM Technologies.