Reducing your procurement costs can radically help your businesses budget – in a number of different departments, but primarily in a purchasing department. The aim of procurement savings is to reduce all costs relating to purchasing, improve one’s supply chain management, and reduce product pricing.
To help you decide how your business can reduce procurement costs, we have curated a list of tips and advice to help you make decisions within your purchasing department. While it can be useful to reduce your expenditure in any department, compromising on quality may not be the wisest method to maintain your business's moral position. The bottom line: you need to save money without sacrificing the quality of the products. Here are our expert ideas to help you reduce your procurement costs.
Buy What You Need – And No More
When it comes to marketing, it can be tempting to buy products in bulk. Of course, if your products sell out, you will make a profit. But if they don’t – it can result in a loss of income. But how are you meant to predict what will sell and what won’t? Unfortunately, you can’t. What is wiser is to invest in a realistic number of products, rather than moving towards an unrealistically high number. Remember, you can always order more products if need be.
Consider Your Suppliers
The performance of your products is almost directly impacted by your suppliers. Consider this – if your vendors are late delivering some of your products or ship them at the wrong time, the product range that you can sell changes entirely. So, if you’re considering how you can reduce your procurement costs, you should almost clinically assess how your suppliers help your business. After all, time is money, and delivery delays might have a serious impact on your income and end-of-year profits. Don’t be afraid to change up your suppliers for the sake of benefitting your business.
Step into the Digital Age
Having full visibility on your business's purchasing process can make a big difference in how your business operates. Computerize your purchasing process, and confusion as to where your funds are being allocated will disappear entirely. This may take a financial investment initially but will be worth it when your whole team is aware of where your funds are being spent. This is also especially useful because you will see suppliers catalogs online and review products more efficiently, leading to better purchasing choices.
Remove Automatic Renewal
Renewing the ordering of some of your items should not be an automatic process. Instead, you should order your products dependent only on need. This stops you from having an overflow of unnecessary products but also stops unnecessary expenditure. Take care to stop the automatic renewal of your products, and set up a stock-checking schedule and order as often as is needed, and you will find that your company will make certain procurement savings.
Choose Specific Brands
Taking purchasing risks can lead to unnecessary purchases and reckless expenditure. Focusing on agreed brands that your business has reason to trust will create consistency between your products and your customers. Ensure that you make decisions based on a history of trust and reliance with the supplier.
Maintain Management Standards
Even though it might be a difficult question to ask, it might be worth considering if the right people are ordering your products. If not, you may need to assess this to avoid buy incorrect purchases, which will ultimately save business money.
Challenge Existing Contracts
Perhaps your business has had contracts for a long time; you could consider reviewing your contracts. If you have worked with the same suppliers for years, the economic environment may have changed, affecting the market. This might be reason enough for you to look at other suppliers and find suppliers offering better deals. With these new offers, you can challenge your existing supplies and negotiate a revised contract.
If you consider how much your brand might be spending a year advertising your deals, design online can be a more cost-effective, tempting alternative. It can be frustrating to spend a huge amount of time waiting for your flyers and brochures to be designed, only to find that they need a new edit a week later. To fix this, try out Tweak. Tweak has an array of marketing materials that are available to design.
Tweak helps you organize all of these into one handy, safe platform for all of your team to see. If you want to give automated design a go, get the advice of one of our experts. We hope you’ve found some of these ideas useful to help you to reduce your procurement costs.