Advantages/Disadvantages of a Purchasing Professional Using an Agent

What are 3 examples when a purchasing professional may employ the use of an agent? List three advantages and three disadvantages

Chapter 6 (Page 166) describes the agency relationship and how it involves 3 parties. The business or person with an interest (called the Principal) hires the services of another (called the Agent) to carry out business dealings with a third party. The agent represents the principal and there is generally no communication between the principal and third party. Three examples of when a Purchasing Professional would employ the use of an Agent are:

1. Real Estate Agents. The use of a real estate agent for the purchase and negotiation of land/property for future development

2. An agent who negotiates contracts on behalf of the Principal with a third party. Third party could be a customer, supplier, developer, or service provider.

3. A freight Broker or Broker Agent. A principal will hire the expertise of a Logistics Professional to handle the transportation contracts and paperwork for all their transportation requirements.

The three advantages when employing an Agent? Would be as follows:

1. The Professional Agent of choice will only act on behalf of the principal and will act in their best interests at all time. An agent must place the principals best interest above their own at all times, and must communicate all pertinent information to the principal when it is learned.

2. The duties and roles of the principal & agent are written in the terms & conditions of the agreement. Each party knows their responsibilities, and must deal in utmost good faith. Although not all agreements are written…some agreements can be verbal as well.

3. The principal can hire the services of an expert in the profession they need an agent for. Example: real estate agent. The agent is responsible to maintain their credentials and standards for their performance and skills while in an agreement with the principal.

There are disadvantages when employing...