In many
Nigerian companies, procurement is treated like a simple admin task:
“Just buy what
we need at the cheapest price.”
But behind
that “just buy it” mentality, businesses are quietly losing millions every
year.
From
fast-growing startups in Lagos to factories in Aba and Port Harcourt, the same
avoidable mistakes show up again and again - eating into profits, stressing
teams, and damaging brands.
If you have
ever wondered why your costs feel high, margins feel tight, or operations feel
chaotic… your procurement process might be the hidden culprit.
Let’s walk
through six common procurement mistakes—and how you can start fixing them.
1.
Chasing the Cheapest Price (And Paying More in the End)
On paper, the
lowest quote looks like a win, in reality, it’s often a trap. When you choose
suppliers based only on price and ignore quality, reliability, and compliance,
you’re betting your business on short-term savings.
You might save
₦50,000 on an order today - but:
·
What
happens when poor-quality materials damage your products?
·
Or
when delayed deliveries shut down your production line?
·
Or
when non-compliant suppliers expose you to legal or regulatory issues?
Those
“savings” can quickly become losses in the hundreds of thousands or even
millions.
Real Story:
I once worked
with a mid-sized FMCG company in Lagos that thought they had struck gold with a
“cheap” packaging supplier. On paper, the numbers looked great. In reality, the
glue on their cartons was so poor that boxes started opening during transit.
Products spilled, broke, and had to be written off.
By the end of
that quarter, they had lost about ₦18 million in:
·
Customer
returns
·
Replacement
costs
·
Logistics
headaches
·
And
the hardest to repair - brand damage
All because of
a “cheap” supplier that was never properly evaluated beyond price.
Takeaway:
Price matters, but total cost of
ownership matters more. Always weigh:
·
Quality
·
Reliability
·
Compliance
·
After-sales support
before you celebrate that low
quote.
2. Buying Blind: Poor Needs
Assessment
“How many
units do we actually need?”
“Is this the right spec?”
“When do we really need this delivered?”
If these
questions are not clearly answered before you buy, you’re guessing—not
managing.
That
guessing leads to two expensive extremes:
1. Overstocking
o
Cash
locked in slow-moving or idle inventory
o
Higher
storage and insurance costs
o
Risk of
damage, expiry, or obsolescence
2. Understocking
o
Stock-outs
and delayed orders
o
Lost
sales and frustrated customers
o
Rushed,
last-minute buying at premium prices
Many
businesses rely on “gut feeling” or “how we did it last time” instead of data.
Takeaway:
Your procurement should be guided by:
·
Historical
consumption data
·
Sales
forecasts
·
Seasonality
and demand patterns
·
Lead
times from suppliers
When you know what, how much, and when you need items, you stop firefighting and start planning.
3. Skipping Due Diligence on
Suppliers
In a bid
to move fast, many businesses skip basic checks and simply go with:
“My guy
said this supplier is reliable.” Referrals are great but they are not due
diligence.
Without
proper vetting, you risk working with:
·
Suppliers
with a history of fraud or defaults
·
Shell
companies with no real capacity
·
Vendors
who cannot scale as your demand grows
·
Businesses
that don’t comply with regulatory requirements
A few
simple steps can save you from big headaches:
·
Check
their registration with the Corporate Affairs Commission (CAC)
·
Visit
their office or facility (physically or virtually)
·
Ask for
and call at least 2–3 references
·
Review
past performance, certifications, and capacity
Takeaway:
Treat supplier selection like hiring a key employee. You wouldn’t employ a
finance manager without background checks—so don’t entrust millions in spend to
an unvetted supplier.
4. Vague Agreements: Relying on
Handshakes and Verbal Promises
Relationships
matter in Nigerian business. Many deals start over phone calls, lunches, and
handshakes. But when real money and deadlines are involved, vibes are not
a contract.
Without
clear, written agreements, you’re exposed when things go wrong.
Key
questions that must be answered in writing:
·
What are
the exact delivery timelines?
·
What
happens if there are delays—any penalties?
·
What are
the precise specifications of the goods or services?
·
What are
the payment terms and conditions?
·
How
will disputes be handled?
If it’s
not documented, it’s difficult to enforce.
Takeaway:
A solid contract is not a sign you don’t trust your supplier—it’s a sign that
you both want clarity, fairness, and a long-term, professional relationship.
5. Treating Suppliers Poorly
(Especially With Late Payments)
Many
businesses see suppliers as people to “beat down” on price, delay on payment,
and pressure on delivery. That approach works for a while, then one day, you
urgently need:
·
Faster
delivery than usual
·
Extra
stock at short notice
·
A little
extension on credit terms
At that
point, your supplier will remember how you’ve treated them.
Suppliers
talk. They know the clients who:
·
Always
pay late
·
Argue
over every small invoice
·
Change
terms halfway through
·
Disappear
when it’s time to pay
Those
clients get:
·
Lower
priority
·
Stricter
payment terms (cash upfront)
·
Less
flexibility when things go wrong
The
businesses that treat suppliers as partners, not enemies, get:
·
Better
pricing over time
·
Faster
responses in emergencies
·
Honest
communication about issues
·
Preferential
allocation when stock is scarce
Takeaway:
Your supplier relationships are strategic assets. Protect your reputation as a
fair, reliable customer—it will pay you back when it matters most.
6. “Set and Forget”: Not Monitoring
Supplier Performance
Signing a
contract is not the end of the procurement process—it’s the beginning of the
relationship. Many companies choose a supplier and then go on autopilot. No
tracking, no reviews, no feedback.
Without
performance monitoring, you have no real idea if your supplier is:
·
Consistently delivering
on time
·
Maintaining quality
standards
·
Keeping prices
stable and fair
·
Sending accurate
invoices
Over
months and years, small lapses add up:
·
Lost
hours due to small delays
·
Quiet
quality issues that hurt your brand
·
Gradual
price increases that erode your margin
You may
be stuck in a poor relationship simply because “this is who we’ve always used.”
Takeaway:
Set clear Key Performance Indicators (KPIs) and review them
regularly, such as:
·
On-time
delivery rate (%)
·
Defect or
return rate (%)
·
Invoice
accuracy
·
Responsiveness
to complaints or changes
Good
suppliers will welcome this, it helps them improve too.
Turning Procurement into a Profit
Centre
Procurement
shouldn’t just be the department that “spends money.” When done right, it
becomes a strategic advantage:
·
Protecting
your margins
·
Reducing
operational risk
·
Strengthening
your brand
·
Supporting
your long-term growth
Here’s a
simple place to start:
1. Review your last three major
purchases.
2. Ask yourself:
o
Did we
choose based only on price?
o
Did we
clearly define what we needed?
o
Did we
properly vet the supplier?
o
Do we
have a clear contract in place?
o
Are we
paying on time and building trust?
o
Are we
tracking this supplier’s performance?
If you
spot gaps, you’ve already taken the first step: awareness.
From
there, you can start putting structure, data, and strategy behind how your
business spends money.
Over to You
What
procurement challenges have you faced in your business?
·
Have you
ever been burnt by a “cheap” supplier?
·
Struggled
with stock-outs or overstocking?
·
Had
relationship issues with suppliers?
Share
your experiences and lessons in the comments. Your story might be exactly what
another business owner needs to hear.