While most businesses end up fire fighting when it comes to supplies, trying to manage one dearth of materials after another, other firms take the pressure off themselves and their employees by planning ahead, and taking a much more proactive approach in terms of buying in their supplies. It’s also easy to forget about what for most firms are essentials, such as bubble wrap & cardboard boxes, especially if there are concerns about limited cash flow and the risk of ordering too much. Ultimately however by holding back on purchases, you could be holding back on being able to do business properly, and thus creating a vicious cycle. Here are a few tips to help you purchase for you business more effectively:
- One massive advantage to buying on behalf of a business, and one that increases as the company does, are the savings to be had from economies of scale. Large volumes always lower the price of goods, and after building up relationships with suppliers even bigger discounts can usually be negotiated. Asking the same suppliers for discounts on bulk shipping for larger orders, or for recycling schemes, are also options with can help make savings.
- It’s easy to write off proper inventory taking as an unnecessary waste of time and effort, however all this means is that the proper planning and best practice methods are yet to be implemented. Without a proper system in place for taking inventory, there’s no way to know exactly what you need to be buying, which leads to over and under purchasing, which can both harm the company.
- A good rule of thumb is that a company can afford to buy in bulk when the savings from doing so outweigh the ‘cost of money’, i.e. any interest of loans of cash. Obviously this isn’t the only consideration, but is definitely one of the more important ones.
Forward planning and set-procedure are the watchwords for buying company supplies in order to avoid spending too much money, or missing out on profit because a lack of materials. The easiest way to increase profit is always by cutting costs, so by leveraging discounts on bulk buys, and only purchasing when needs must, is one way of improving that bottom line.
Note from the Editor: This was a guest blog post.