Devoted to purchasing, purchasing agents, and all things related

I just wrote an entry about contract compliance and it made me think of something that has always given me pause about our industry.

Let's talk about the concept of auditing contract prices.  More specifically, let's discuss something I've seen that make no sense to me.

I once worked with a commodity that was low dollar/high transaction.  (Savvy fellow Buyers can quickly narrow it down to a few choice commodities.)  The company had contract pricing for the items.

When I became involved with the commodity, there was already a procedure in place to audit the contract through a third party as our Accounts Payable department would not audit the pricing, saying it was too much work and beyond their capabilities due to the volume.  Bringing yet another vendor into the mix considerably slowed down the payment time.

Here's how it worked every month:

1. The Vendor submitted an invoice to AP.
2. The Vendor also submitted a price file to the Auditor. 
3. AP submitted the same invoice to the Auditor.
4. The Auditor compared the price file to the invoice.
5. The Auditor sent everything back to AP and approved the invoice.
6. AP paid the Vendor and the Auditor.

What sense did it make to even have it "audited" if it was the vendor submitting the price file every time?  If one accepts the premise that the vendor can't be trusted not to make intentional or unintentional errors, who's to say that the auditor can be trusted not to make the same?  Why were we paying a third party that was adding no value to the transaction whatsoever?

What was management's response when the lack of logic was pointed out?  "That's the way we've always done it and in case there is ever a problem, we can say it has been audited."

Conclusion/Question:  If your Purchasing Department is doing something like this, ask, "Why do Buyers do these things to themselves?"