Regardless of the size of your business, it is important that you never underestimate the impact good purchasing practices have on your bottom line. A general rule of thumb is every dollar saved when purchasing, equates to six or more dollars of sales.
Purchasing is all about understanding what is needed, how and when it is going to be used and how much it is going to cost. Below are 10 tips on how to get the most out of your procurement dollars.
- Have one person in charge of purchasing.
- Have a comprehensive list of all items you purchase.
- Look at doing a monthly/weekly walk through of your inventory – with your list – to note what items need to be ordered. This practice will help to keep the business stocked.
- Have a safety stock (a quantity you always want to keep on hand) for critical items. Once you are down to the safety stock quantity, you know it’s time to order. This will help alleviate running out of must-have items.
- Look to combine as much as possible on one order. It saves freight and processing time.
- Check with your suppliers to see if they offer quantity price breaks for items purchased on a regular basis. It may be more cost effective to purchase 2 months’ worth of product at once than to buy an item every month.
- Look at the terms of your purchase orders. Work to get the best terms.
- Keep good records on your suppliers, i.e. where is your product is shipping from, shifts worked, who your main contact person is in both sales and customer service. This information can be invaluable when you have an emergency.
- Make sure you get an order acknowledgement and read all terms and conditions. Always double check the quantity ordered, part number and delivery information.
- Utilize your sales rep. Sales reps are an invaluable source of information. They can help you solve problems, save money and introduce you to new product that can grow your business.
Remember investing time and money to get your inventory and purchasing systems in place will more than pay for itself by allowing you to run your business, rather than your business running you.