In every business, there are things that must be purchased. Even when you are a manufacturer, there are things that you will purchase from other manufacturers. It’s important that the purchasing activities are monitored as this is one sector where the business could be overspending. Besides monitoring the activities, there are several other things that can be done to improve this sector.
Buying in Bulk Where Necessary
If there are things that are needed in the everyday operation of the business, they should be bought in bulk. This may be applicable in restaurants, hotels and printing businesses among others. One thing that a business should keep in mind though is that even when purchasing things in bulk is cheap, they should project sales. Whatever they buy, it should be utilized within a reasonable period to avoid stock spoilage. Buying stuff in bulk will reduce the buying cost and lower unit cost.
What is the Purchasing Pattern?
This is something that you should analyze annually. How often do you purchase, what is the level of quality of the products, the prices and are the goods delivered on time? Are you buying the right quantities? It could be you are losing money on the habits of your purchase. Analyze it with experts and see where you can adjust to reduce the expenses.
Avoid Buying Stuff on Phone
Unless you are working with a company that you have purchased products from before, you should avoid being dubbed by salespeople. They will call your business and speak to someone who has the authority to give approval for product purchases. They have a convincing power with their ‘great deals’ while knowing very well they are selling substandard goods. No one in the business should give approval to buy goods from strange callers.
Authorize Specific People to Give Approvals
The business should be well organized and not everyone should purchase things whenever they need. Most companies have a central purchasing office. Only this office can authorize a purchase regardless of how small it is. This controls the purchasing sector and will prevent misuse of resources.
There is always a way that a business can enhance its purchasing activities. Buying goods in bulk, analyzing the purchasing pattern, having a central purchasing office and avoiding making orders from strangers on phone are some of the things that you should avoid. Tracking and minimizing expenses is something that every business needs.