Is Your Business Quietly Bleeding Money?
Is that "cheap" supplier actually costing you millions? From vague handshakes to buying blind, hidden procurement mistakes are quietly bleeding Nigerian businesses dry. Stop the profit leaks. Discover the 6 deadly errors holding you back, and how to turn your procurement into a strategic profit engine.

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.