Profit Boosting tips – Effective Purchasing
We’re very confident that our service represents brilliant value for money, however can you say the same about all of your other suppliers?
Effective purchasing or buying, whatever you call it, may seem like a basic business process, however sometimes the obvious can be overlooked. Effective purchasing can have a massive positive impact on your profits for a relatively small amount of work, in some instances one call in to a supplier can achieve huge gains. Please see below our top tips for effective purchasing;
1) Ask you current suppliers for a lower price! Don’t be shy, research the market and if you think you are overpaying, ask for a better price.
2) Don’t assume that because you have been loyal to a supplier for a long time they are giving you their best price. Insurance is a good example of this, recurring premiums rarely go down.
3) Review your prices and supplier base regularly and benchmark against the market, complete a full review of your supplier portfolio at least once a year.
4) For high value items and one off purchases, get at least three comparative quotes. There can be a surprising range of prices available.
5) Use your purchasing power, reduce the size of your supplier base and push extra volume/activity though those remaining suppliers. Inform the supplier you are going to put more their way if the price is right.
6) Directly contradicting the point above!, add more suppliers into your supplier base and use their competing prices as bargaining tools to drive down cost. The utopian position is a balance somewhere between point 5 and 6.
7) When ordering look out for suppliers adding unwanted charges, like delivery, insurance, handling fees. These items tend to be low value add-ons but can mount up and add zero value.
8) In addition to your trade suppliers, the following areas often provide opportunity for cost savings;
i) Insurance for; motor vehicles, public liability, premises/assets e.t.c
ii) Utilities, water, gas, electric e.t.c
iii) Phones and broadband, particularly call charges and mobile phones
iv) Banking and finance charges
v) Advertising, both online and print media
All of the above points have essentially concentrated on price, in particular trying to achieve a lower price. However we would also comment that lowest price isn’t always best. Other factors can be equally important such as reliability, quality, competence, expertise e.t.c. Achieving an optimal mix of price and service creates value and value is key for profit generation.
To find out how we can help to add value to your business please contact us.