In the United States, a typical gas-powered passenger vehicle emits 4.6 metric tons of carbon dioxide every year. Due to their lower lifetime emissions and environmental impact, adoption of electric vehicles (EVs) is on the rise. As part of this transition from gas-powered vehicles, purchasing managers procuring EV charging stations are laying some of the first building blocks of the infrastructure needed to support this growing industry and soon to be ubiquitous vehicles.
Any purchase comes with risk: poor quality goods, delays, and overspend featuring among the most common. For purchasing managers, these risks are amplified. Often dealing in large volumes of product to a tight budget, businesses rely on them for efficient delivery of effective goods – or otherwise face threats to operations and ultimately, their bottom line.
Increasing digitisation has posed significant challenges to purchasing processes in the past two years, and with the COVID-19 pandemic and related shortages of materials and components, procuring technology has never been more complex. But with digitisation also come new tools and software to help purchasing managers reduce the risks they can and can’t see.
In this article, we aim to alleviate some of the pressure by giving an insight into the common risks purchasing managers face when procuring EV charging stations, and practical measures they can use to reduce them.
1. Deficient internal needs analysis
The first risk in the procurement process is an inadequate internal needs analysis. Not knowing exactly what charging station equipment you need and when you need it by can quickly lead to major issues, such as buying the wrong or low-quality equipment, too much or too little, or at elevated prices.
EV charging stations play a crucial role in enabling staff to commute to their place of work. Being unsure of other details such as the duration it takes to fully charge one car, the kinds of batteries used, and WFH/office working schedules that impact commuting patterns, can directly lead to staff shortages due to insufficient charging bays – and the associated damage to business profitability and competitive edge.
Reducing the risk
Investing in software applications that use big data will enable you to conduct a thorough internal needs analysis to set realistic budget and time constraints. By analysing transaction data and user trends, you can develop strategies that reduce your risk of under- or overspending, choose suitable vendors and establish mutually beneficial relationships with them to get the best deal.
By enabling you to deliver what’s needed when, a carefully conducted needs analysis will also serve to bolster EV user satisfaction with knock-on effects for morale and public perception of the organisation.
2. Selecting the wrong vendor
While budget optimisation ranks highly on purchasing managers’ priorities, stretching it as far as possible over the maximum volume of goods can present challenges. Choosing the vendor with the cheapest charging station equipment can cause disruption due to failure, as well as costs for repair, maintenance, or re-purchase for inadequate goods that can’t do what you need them to.
Charging station equipment is responsible for carrying high electrical currents to EVs. So, while buying cheaply may please your finance department in the short-term, selecting low-quality products can pose risks to employee safety. When your business is associated with such products or exploitative practices via a vendor, the damage is hard to undo – even with a sophisticated (and expensive) PR campaign.
Reducing the risk
Quality, user safety and cost are mainstays of the vendor selection process, but the events of the last two years have demonstrated that supply chain sustainability should also be prioritised. Conducting thorough research into a vendor’s supply chain history, their ability to adapt to market shifts and unforeseen circumstances, such as the chip shortage, and still deliver products should all be taken into consideration.
Increase your success in vendor selection by drawing up a comprehensive set of KPIs to evaluate the performance of potential vendors, and whether they match up to your standards. Schedule a meeting with their Head of Operations or Distribution and ask the tough questions to which you need answers to ensure they can deliver high-quality equipment that adequately matches your needs.
3. A decentralised supply chain
Leading on from vendor selection, poor management of the various streams of your supply chain will add layers of complexity that increase the chance of errors and delays. Without centralised procedures around your supply chain, requests, purchases, payments, and invoices, purchasing managers can face obstacles in the meeting delivery schedules of charging station equipment when needing to double check and chase up documents.
A lack of transparency also increases a business’s susceptibility to foul play. Untrustworthy vendors may wish to take advantage if your supply chain management isn’t optimised; double payments, incorrect invoices, and other falsified documentation lead to financial losses directly, and indirectly through the extra hours staff spend chasing a resolution.
Moreover, lacking a robust supply chain management strategy hinders your ability to plan for supply chain emergencies – for example, to cope with the semiconductor shortage that continues to hit the EV market.
Reducing the risk
Software-based procurement tools using artificial intelligence and centralised data can facilitate supply chain organisation with a vendor portal and automation of the management process. These tools also contain features to track issues and identify cost-saving opportunities with trusted vendors or if your needs change.
Other tools allow you to visualise your supply chain of all your direct and upstream sellers –and monitor their performance and any bad press that could trickle down and affect your reputation.
Automated management of the request, approval and payment process will enable you to both track and protect your spending, and help you build better relationships with your vendor partners by paying them promptly, assisting you to get the best deals and discounts.
4. Poor contract handling
Disorganised contract management presents challenges when procurement agreements and legislation are not adhered to, leading to penalties and fines if discovered. Failure to comply with any laws and contractual clauses also puts your business on the backfoot if needing to seek compensation from a vendor who has failed to supply your charging station equipment to the agreed standards.
The knock-on effects include leaving the needs of your charging station and EV users unmet, with the potential to cause major disruption to staff availability at the office, and damaging business-employee relationships if the disruption extends to their personal life.
Reducing the risk
Coming to the issue of contract handling as an opportunity to build long-lasting partnerships with trusted vendors, your procurement process stands to reduce these risks long-term, as well as benefit from cost-savings and favourable treatment as a returning and respectful buyer.
Keeping contractual agreements in a centralised chronological library allows your procurement team to easily monitor which aspects of your vendor agreements are not being fulfilled and safeguard your business if needing to seek redress. Linking your contract library with transaction data also enables you to produce reports for marketing, finance, and executives to facilitate and simplify future negotiations.
5. Manual processes
While cybersecurity can threaten data security, failure to adopt technology to automate your purchasing process, such as for tracking your data, presents some of the most serious risks to your company.
While straightforward at first, manual management of your charging station purchasing journey can quickly become complex when entering and tracking large amounts of data across various spreadsheets. Difficulties in locating data can slow down your entire process with impacts on product delivery times and pose a security risk from exposing your data to too many staff members.
Human error leading to inaccurate data can have financial and reputational repercussions such as shortages and over purchasing. Further inefficiency is created as more staff are required to spend time finding, entering, and correcting data – as well as the legal costs from supplying and signing contracts that include incorrect information.
Reducing the risk
Introducing automation can be met with resistance from staff members accustomed to the manual techniques they’ve used in the past. But it is the best strategy to increase efficiency, build in transparency and decrease human error – and reduce associated risks.
To choose the right automation software for the purchase of charging equipment, first model and audit your current process to highlight key areas that would benefit from automation. Once in place, this software allows you to map and streamline your workflows, while using KPIs to measure and adjust specific areas to boost your efficiency from a financial and staffing perspective – helping you to reduce costs and bolster the resilience of your purchasing process from procurement to payment.