Every business—whether it’s a small home business or one of the largest corporations—makes purchases. Types of purchases vary. They may be simple office supplies and janitorial supplies, or long lists of raw materials for manufacturing processes.
Every dollar spent in the purchasing process is a dollar invested in the company finances. A careless purchase for unnecessary product is money wasted, money gone, and money to the red side of your ledger. Any dollar saved through smart purchasing is a dollar in your bank. It goes directly to the bottom line of profit.
To be successful at purchasing, you must consider all costs of acquiring materials—no matter what they are. Does driving 20 miles out of your way make sense to save a dollar on one item? No. Does it make sense to buy in bulk? Maybe or maybe not!
Buying large, unnecessary quantities of an item usually lowers the per item price, but it doesn’t save money if your company needs a specific limited quantity of that item and the remaining quantities sit unused on a warehouse shelf. Money was uselessly spent in this case. It is wasted due to labor in material handling and in cluttering valuable storage space. Eventually the leftover items are outdated, scrapped, or sold at a loss. The purchaser (although looking good in the beginning for getting a “bargain”) has ultimately lost money for the company.
Another consideration that many purchasing agents seem to forget is the freight cost for acquiring an item. Unless it is a letter sent through the US mail, the farther an item ships the more it generally costs. Also, the heavier an item is, the more it costs to ship to you. Many purchasers are reluctant to spend a bit more on an item and save double the dollars on freight. Interesting!
Buying locally is not just for produce! Buying locally may result in direct savings to your business’ bottom line. Check it out!
Give your local stocking distributor from the same UPS zone a chance to meet your price. Does your company use industrial chemicals such as ones used for soldering? Can a local distributor stock them for you and even possibly deliver them? Think of the savings of freight charges. Even paying smaller delivery charges may be much less expensive overall.
Does your supplier consolidate shipments? Are they considerate of your freight charges? One supplier I’m familiar with seems to ship the dozen eggs one at a time and adds the carton in the last package. It is very frustrating! Even $.50 for a dozen eggs (how cheap is that!) can lead to financial harm. If your supplier sends one or two eggs at a time at a minimum of $6.00 (less than a pound) the dozen eggs has now cost including freight between $36.50 and$72.00 for the same dozen. WOW! Was that dozen eggs really a great deal?!
If the purchasing agent thought about all costs he might have ordered from a local grocer at $3.00/dozen or ordered organic eggs from the local farm and paid a $10.00 delivery charge. Total cost: $13.00/dozen for the best, freshest eggs. Think of the money your company could ultimately bring to the bank.
Check local distributors. Pilgrim will stock for you and combines all orders shipping the same day to save you freight costs. We appreciate our customers and are considerate of their costs, too. Visit our website www.pilgrimelectronics.com to contact us or give us a call at (860) 782-0483 today to discuss how we can help you personally save on freight costs.
