Every purchasing department makes cutting costs their resolution for the New Year. However, you might find yourself wondering how to get more out of your budget. Try these strategies to reduce costs and find better deals.
Know Your Inventory
The beginning of the year is a perfect time to look at inventory across your entire fleet and see where your budget is going compared to where it should be headed. Start by collecting your invoices and figuring out how much of what you've bought, and then do an inventory and see what's left. If you've purchased bulk lots of a component and you've still got plenty in stock, ask why you bought in such volume. And conversely, look at what you can't keep stocked and figure out whether demand for that component will be the same this year, and plan ahead.
Get A Forecast
Every purchasing department would love to know exactly what's coming over the horizon, but unfortunately, that's just not possible. What you can do, though, is get a rough idea of what you should expect. Ask in detail about products being developed and projected needs for the next upcoming fiscal year. Be sure to use the inventory data you've gathered to help form the forecast and guide departments that might not be sure what they'll need.
Shop With Specifications, Not Brands
Sometimes, it's true, a brand name product is what you need to get the job done for your fleet. But in many cases, we get locked into a brand instead of thinking about the needs of the job. You should start with the specifications for the product you need instead of the brand names you can shop for. Many distributors will have the specifications you need and can help you hunt down a component that does the same job at a better cost efficiency.
The beginning of the year is a great time to cut costs.
Tighten Up The Administrative Ship
Computerization has helped quite a bit with purchasing, especially as software has gotten more complex and allowed purchasing teams to cross-reference with inventory and accounting systems. That said, though, the most likely flaw in any system is human error, so go through your purchasing over the last year and ask yourself a few questions. Who's not clear on the forms? Who buys based on what they're being told instead of looking in their inventory? Who could use a clearer understanding of how the purchasing system works? Getting everybody on the same page, politely of course, will save everyone time and limit the number of returns and last minute rush orders you have to deal with.
Consolidate And Coordinate Suppliers
Ask yourself this: How many suppliers did you buy the same type of product from last year? Why did you purchase? Are you sure you're getting the best deal on that product, every time? While there's something to be said for supplier redundancy and prices can shift up or down depending on your relationship and needs, look closely at consolidating and coordinating.
Review Your Purchasing Requirements
Finally, there's this job -- the one nobody loves doing, but the one that most needs to be done: When do you buy and when do you send the request back? Reviewing your purchasing requirements might take a few meetings, not least because different departments will have different needs, so you'll have to adjust policies accordingly.