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Hello and welcome back to Business English Pod for another lesson in our English for Purchasing series.
In today's lesson, we'll look at managing purchase orders and contracts.
Before we get started, a quick reminder that a PDF transcript for this lesson, along with hundreds of others, is available on the BEP website.
Premium members can also access extra resources for every lesson.
Finding the right vendors to supply you with key products, parts, or services is very tricky.
Poor purchasing decisions can cost you time, money, and opportunities.
But smart purchasing doesn't end with identifying the right vendor.
Once you've done that, you need to ensure your contract and purchase orders support your goals and requirements.
The contracting stage is critical.
Even though the decision has been made, important terms still need to be discussed and clarified.
Finalizing a purchase order or contract is your opportunity to make sure the vendor fully understands your expectations.
If anything is unclear or missing, now is the time to raise questions or suggest changes.
In these discussions about contracts, you might have to stand firm on things like timelines or assert other elements that are non-negotiable.
You might also have to ask for assurances or confirm specific contract terms.
And you may have concerns about compliance issues that you need to stay firmly.
In today's dialogue we'll listen to a phone conversation between Adam and Maya.
Adam is a purchasing manager at a fitness equipment company called XFit.
Maya works for a vendor that is going to provide a key component of XFit's line of treadmills.
They are working through some of the terms of their business arrangement.
As you listen to the dialogue, try to answer the following questions.
1.
What does Adam say about the 30-day delivery schedule that's stated in the draft contract?
Two, what specific terms does Adam need to confirm in the case of delivery delays?
Three, what recent change in Maya's company gives Adam cause for concern?
So, we're pretty much aligned overall.
I just want to clarify a few final points before we sign off on this.
Yes, of course.
Happy to go over the details.
Okay, so first thing, delivery schedule.
The contract states 30 days.
Not sure if that's your standard, but we're really going to need hours closer to 25.
I see.
That might be tight, actually.
Let me check with production.
It could be possible if we prioritize your order, but I really need to check.
Great.
I'd appreciate that.
And I'm sure delays are unlikely, but could I just verify the cancellation terms here?
Sure.
If delivery exceeds 10 days past the due date…
Just one sec.
We were going to change that to seven, right?
Ah, yes.
Sorry.
I was looking at the original.
I'll note it again here.
More than seven days past due, there's a 3 penalty per week and you have the option to cancel after three weeks.
But in all my time here, it's never come to that.
Good to hear.
And thanks for making that change.
So, that's it for the delivery stuff.
Next on my list.
Can you confirm what's covered for defective parts, to make sure what I've got is right?
Standard coverage is 18 months from delivery, including manufacturing defects and premature wear.
Anything outside of spec would be replaced at no cost.
Okay, that works.
Now, another thing I wanted to look at.
I understand you folks have purchased a facility in Cambodia recently.
Is that correct?
Yes, we did.
It's part of our expansion strategy, but I should say that plant is not involved in this order.
Understood.
Still, given our internal policies, we would need to know that the factory is certified.
Otherwise, we simply can't do this.
Of course.
I can send over documentation on labor compliance and the audit schedule.
We're going through SA8000 certification now.
That'd be great.
We just want everything fully documented up front.
We've had board-level scrutiny on this lately.
Completely understandable.
I'll follow up this afternoon with the latest reports.
Now let's go through the dialogue again and look at the language and techniques Adam uses when talking about the contract.
There are several things he needs to confirm before his company can sign off on or approve the final agreement.
So, we're pretty much aligned overall.
I just want to clarify a few final points before we sign off on this.
Yes, of course.
Happy to go over the details.
Okay, so first thing, delivery schedule.
The contract states 30 days.
Not sure if that's your standard, but we're really going to need hours closer to 25.
The first thing Adam wants to talk about as they review the contract is the delivery schedule.
A delivery schedule lays out timelines for the delivery of products.
On this issue, Adam is quite firm.
The contract says 30 days for delivery, but Adam insists on 25 days.
He says we're really going to need the 25-day schedule in the contract.
There are some contract terms you might be flexible on, but others you'll have to insist or stay firm on, as Adam demonstrates.
Let's run through some more ways to stay firm on timelines.
It's really critical for us to stick to the original delivery date.
We can't afford delays on this one.
The timeline can't change at all.
That's later than we can really manage.
Can you deliver on the 15th instead?
I understand the issue, but we have to stay on schedule.
So how does Maya respond to Adam insisting on a 25-day delivery schedule?
Let's listen.
I see.
That might be tight, actually.
Let me check with production.
It could be possible if we prioritize your order, but I really need to check.
Great.
I'd appreciate that.
And I'm sure delays are unlikely, but could I just verify the cancellation terms here?
Maya says that 25 days might be tight.
When we talk about timelines.
Tight means that the timeline is short or there's not much room for mistakes.
Maya is going to check with production to make sure 25 days is okay.
And on the topic of timelines, Adam also wants to discuss what happens if there's a delay or late delivery.
As he says, he wants to verify or confirm the cancellation terms.
In this way, Adam is emphasizing the importance of the delivery schedule and he's asking for reassurance.
Asking diplomatically for reassurance is something you might do frequently when talking about a contract.
It's part of managing risk.
Let's run through some more examples of diplomatically asking for reassurance.
Can I ask for some clarity on how delays would be communicated?
I assume there's a backup plan in place if production runs behind.
Would it be possible to get written confirmation on that?
Now let's listen to the details about cancellation terms.
As we can hear, it's a good thing that Adam asked for reassurance.
Sure.
If delivery exceeds 10 days past the due date... Just one sec.
We were going to change that to 7, right?
Ah, yes.
Sorry.
I was looking at the original.
I'll note it again here.
More than 7 days past due, there's a 3 penalty per week and you have the option to cancel after 3 weeks.
But in all my time here, it's never come to that.
Adam was smart to bring up the cancellation terms because Maya's version of the contract didn't include a change they'd agreed upon.
Now that he's cleared up delivery issues, he can move on to another topic.
Good to hear.
And thanks for making that change.
So, that's it for the delivery stuff.
Next on my list.
Can you confirm what's covered for defective parts, to make sure what I've got is right?
Adam asks very directly if Maya can confirm certain contract details.
He wants to clarify what's covered for defective parts.
These are parts that are faulty, damaged, or not up to specifications.
Confirming contract terms is essential because you may have had numerous conversations about specific items.
There may be different versions of the contract and you want to make sure the final version includes exactly what you need.
Let's try some more examples of confirming exact terms in a contract.
So, to confirm, the pricing stays fixed for the full 12-month period, correct?
Just confirming, warranty coverage starts at the delivery date, right?
And that includes shipping and handling, as per the quote, yes?
Let me just make sure here.
There's no prepayment required, right?
These examples show how to state what you think is right and then ask for confirmation.
Adam's approach was broader.
He asked Maya to list what is covered in this part of the contract so he can match what she says to his understanding.
Let's hear what Maya says about coverage or specific terms regarding defects and find out if it matches Adam's understanding.
Standard coverage is 18 months from delivery, including manufacturing defects and premature wear.
Anything outside of spec would be replaced at no cost.
Okay, that works.
Now, another thing I wanted to look at.
I understand you folks have purchased a facility in Cambodia recently.
Is that correct?
After confirming that the terms related to defects are acceptable, Adam asks about a new issue.
He asks Maya to confirm that her company has bought another facility or factory in Cambodia.
It will be immediately clear to Maya that an American company would have compliance concerns about Cambodia.
The country has faced scrutiny for many reasons, but especially labor practices.
And to manage risk appropriately.
Adam needs to introduce these compliance concerns before finalizing a contract.
What are some other ways of introducing concerns about compliance when discussing a contract?
Let's practice some more examples.
We'll need to confirm that the facility meets our supplier code of conduct.
Just to let you know, our board will ask about labour and sourcing compliance.
If it's manufactured there, we'll need to see the audit results and certificates.
We'll have to ensure this aligns with our commitment to environmental standards.
Adam has introduced the issue of Cambodia quite generally, inviting Maya to comment.
Let's hear how the issue is dealt with.
Yes, we did.
It's part of our expansion strategy, but I should say that plant is not involved in this order.
Understood.
Still, given our internal policies, we would need to know that the factory is certified.
Otherwise, we simply can't do this.
Maya deals with Adam's concern by saying the factory in Cambodia wouldn't be used in Exfit's order.
But that's not quite good enough for Adam.
This compliance issue is what we call non-negotiable.
That means XFIT has absolutely no flexibility on the issue.
Adam has to assert this non-negotiable very clearly.
He says they need to know the factory is certified or that it's been inspected and approved.
If Maya's company can't show that, then, as Adam says, they can't do this.
Adam makes it very clear that the compliance issue is absolutely critical.
Let's run through some more ways of asserting a non-negotiable.
We really don't have any flexibility on this particular point.
It's essential.
I need to be clear that this is a hard and fast requirement for us.
Without that clause in writing, we simply can't move forward.
Is Maya willing to cooperate with Adam on this non-negotiable compliance issue?
Let's listen.
Of course.
I can send over documentation on labor compliance and the audit schedule.
We're going through SA-8000 certification now.
That'd be great.
We just want everything fully documented up front.
We've had board-level scrutiny on this lately.
Completely understandable.
I'll follow up this afternoon with the latest reports.
Maya is fully cooperative on the compliance issue.
She's quick to agree to sending over all the documentation required, including an audit schedule and the SA-8000 certification.
These are documents that will show that they're in compliance with standards.
And Adam emphasizes the importance of the issue once again by pointing out that it's their board, or board of directors, that wants these assurances.
Now let's practice some of the language we learned in today's lesson.
Imagine you work in purchasing at a manufacturing company.
You are working out the terms of a contract with a new vendor.
You'll hear a cue by the vendor.
Then I'll give you a suggestion for what you can say in response.
We'll guide you through each step in the practice and provide an example answer for each response.
Ready?
Let's give it a go.
I think we could do 35 days if production goes smoothly.
Would that work?
Say that 30 days is the maximum for you to follow your own production schedule.
Answer.
Well, we really need to keep it at 30 days to follow our own production schedule.
Okay.
As of now, we don't foresee any delays on our end.
Politely ask for reassurance that they'll inform you immediately if anything changes.
Answer.
That's great.
And just to confirm, you'll let us know right away if that changes, yeah?
Yes, of course.
Now, for the warranty, we cover 18 months after shipment.
Confirm that the warranty also includes support for software-related issues.
Answer.
Perfect.
And that includes support for any software issues as well, right?
Yes, software is included.
And just so you know, these orders will be produced at our new plant outside Monterey.
Now say you'll need documentation that the new plant meets your environmental standards.
Answer.
Okay, we'll need documentation showing that the plant meets our environmental standards.
Understood.
I'll see if I can get you something on that.
Finally, state firmly that meeting environmental standards are an absolute requirement for you.
Answer, I must be clear here that meeting environmental standards is an absolute requirement.
Now let's practice some of the vocabulary we've covered in this lesson.
In a moment you'll hear a series of sentences with a word replaced with a beep.
Repeat each sentence, including the missing word.
For example, if you hear...
You can say, After each response, we'll provide the correct answer.
Let's begin.
If there's any risk of a We need to know at least a week in advance.
Answer.
If there's any risk of a delay, we need to know at least a week in advance.
Answer.
Their proposed lead time might exceed our internal limit by a few days.
We'll need to up in writing just to make sure we're aligned.
Answer.
We'll need to follow up in writing just to make sure we're aligned.
The order will be produced at their new outside sole.
Answer The order will be produced at their new facility outside sole.
We've reached the end of this lesson on managing purchase orders and contracts with new vendors.
We've looked at staying firm on timelines and asking for reassurances.
We've also covered how to confirm specific terms, introduce compliance concerns and assert non-negotiables.
For more practice.
Premium members can access the online quizzes and PDF transcripts for this and other lessons on the BEP website.
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Thanks for listening and see you again soon.
