4 Ways to Dramatically Improve Your Purchasing

1. Have an Open Door Policy

Competition is one among the keys that drive your ability to regulate and reduce your costs, therefore, you ought to have an open door policy for handling vendors. By this I don't mean that you simply should see every sales rep that comes knocking on your door. After all, using some time efficiently is a crucial think about increasing your productivity which results in reduced costs.

What i'm saying is, use some sense in choosing who you see and once you see them, but confirm that you simply or your people are seeing a revolving base of suppliers and vendors. you would like competitive bids for the products and services that your company buys.

If you or your business department are only reviewing prices from an equivalent nucleus of vendors over and over, you're never getting to approach anything even on the brink of total cost control. If you're only dealing year in and year out with a base of normal suppliers, you're not getting to know if you're getting the simplest value from your current sources and you'll not know if you'll get a far better value from another source.

In order for people who do the purchasing to urge the simplest value, they need to constantly be considering new sources, new products, new services, and new procedures.

What if a replacement product has come on the market that lasts twice as long because the one you've got been buying and costs half as much? If your regular supplier doesn't offer this product and you are doing not continue with the merchandise lines of other sources, you'll not even determine it exists.

Never let your people only affect an equivalent group of suppliers and positively not with one source. they need to keep an open mind and this needs keeping an open door.Remember, competition may be a vital weapon in your battle to regulate and reduce your costs.

2. an excellent Source of Ideas

An additional advantage of handling a core of normal suppliers and a revolving base of secondary suppliers is that you simply are going to be exposed to several other ideas. These suppliers are going to be a superb source of input regarding your competition, market demands, industry trends, new products, and new processes. they will provide your people with new ways to seem at things and new ways to try to to things. they'll offer you ideas which will be wont to increase sales, improve productivity, reduce costs, or reduce errors.

It is the business of those people to sell to your industry and related industries. Therefore, in some ways it's their business to understand about your industry. Consider the simplest suppliers and sales reps to be far more than a vendor; view them as a resource and do not hesitate to ask them questions.

They can, and will , be a superb source of latest , creative, and innovative ideas.They can provide you direction which will prevent you from making purchasing mistakes by sharing knowledge with you and, they will help in many other ways.

Let me offer you a firsthand example. A sales rep called on one company I worked thereupon sold printing material and informed us a few new printing plate that provided better image reproduction, lasted 25% longer, and price about 15% but those we had been using. We gave them an attempt run and located of these claims to be true. We changed to those plates exclusively.

We had many reps calling on us and yet only this one was a licensed distributor of those plates. None of the opposite reps could have sold us these plates albeit that they had wanted to. Had we only been working with one source or small base of normal reps, and had we not asked questions and developed a relationship with this rep, we may never have known about these plates.

This is only one of dozens of examples I could offer you . I even have secured sales leads from reps, I even have been given tips that improved production and reduced rejects, I even have obtained employee leads from reps, and that i are given new product ideas by reps. Don't overlook these no cost sources of invaluable information.

3. Dual Signatures

You should require dual signatures on all purchase orders over a preset amount. this may offer you added protection not only against fraud but also against bad buying practices. Furthermore, if something happens to at least one of the parties signing you'll have a second party available that's conversant in the acquisition .

In this case i might suggest that the acquisition form contain a slot for a second signature and therefore the printed words that indicate that each one purchase orders over the preset amount you determine aren't valid without the second signature.

4. Centralize Purchasing Efforts

This is the simplest thanks to realize maximum control and price savings. It makes little or no sense to possess each department or division ordering what they have on their own. It makes little or no sense for various branch locations to be ordering what they need on their own. It makes no sense to permit everyone who needs something to order it on their own.Not only is control lost, but you're also losing the economies of purchasing; having one source do all the buying will enable you to mix purchases for the simplest overall prices and terms.

This will also allow you to figure with a smaller, more select group of proven, best value suppliers to further make sure that you're getting the simplest value and maximum leverage in your dealings with these suppliers. Centralised purchasing provides these significant benefits to you as against decentralised purchasing which robs you of those cost control and reduction efficiencies - replacing them with wastefulness and duplication.

Note: i'm aware that the prices related to processing purchasing requests for little quantities and low cost items from various departments or divisions can often exceed the savings realized on the acquisition itself. Therefore, you'll wish to determine a minimum level of buying that you simply will let various departments engage in to eliminate the interior costs and delays. this subject is just too complex to hide in any detail here. I merely mention it for your consideration.

This edition of The Welch Report has been provided by Derrick Welch the author of 'In Pursuit of Profits: the way to a minimum of Double your Profits Without Increasing Your Sales'. Including 1,000 Cost Control, Expense Reduction, and Income Producing Strategies you'll Start Using Today To Dramatically Increase Your Bottom Line.