Most businessmen will tell you that the easiest way to increase the profitability of a business is to cut costs, and the supplies you buy for your business are no exception. Some companies if pushed will admit to putting the issue of buying in materials, whether that’s timber for a shed building firm, jiffy bags for a delivery company or stationary for just about everyone, is left to its own devices, leaving employees chasing round after shortages. It doesn’t have to be like this however, and here are a few pointers to get overheads and organisation in this area in check.
- Economies of scale are your friend when buying for business purposes, and leveraging for discounts via your buying power is the way to make the most of them. The bigger the company, the larger these discounts can get. Building up a relationship with suppliers is also useful, and means you can start to suggest things like shipping larger volumes and tying in the price to bring down both yours and their costs, and see if they offer any rewards for large scale recycling on your part, which in some industries could be lucrative.
- Having a well-thought out inventory system, especially for any materials used for consumption by and end-user (customer or client), is extremely important, and all too often companies will dismiss this option as time-consuming and costly. All it really takes is the discipline to put a system into practice, and ultimately should even include office supplies. Over-time you should see patterns emerge, and eventually you’ll be able to anticipate what will need purchasing in the weeks and even months ahead, helping out with budgeting no end.
- It’s also important to purchase enough to take advantage of economies of scale, without over-buying and losing more than just the initial outlay. A good idea is to set out the savings made from bulk-buying and negotiated discounts, and weigh them up against the ‘cost of money’ i.e. the interest accrued on bank loans used to purchase supplies. If savings are larger, then ordering more shouldn’t be a problem, the other way round however, and a larger loss than estimated may be being made.