How Can SMEs Save on Purchases From Suppliers?

According to a recent survey, the investment of companies in purchases from suppliers absorbs almost seven out of every ten euros of their income. We are indeed talking about a very high proportion that exceeds payroll payments. But there are ways to achieve substantial savings in purchasing raw materials and services without sacrificing quality or reducing the human team.

Do you want to know how to optimize your company’s purchasing budget without affecting other vital aspects? Continue reading this text, and you will find recommendations to help you achieve it.

Critical Selection Criteria To Save on Purchases From Suppliers

Whether your business is in its infancy or, for some reason, you have to incorporate or replace suppliers, it is essential to know how to choose them. It may seem obvious, but those who provide raw materials and services play a vital role in the value chain of your business. The quality of your products and even your prestige as a company largely depends on them. For this reason, we suggest you:

• First, carefully evaluate and compare various options and offers. It is even advisable to choose one more supplier for each area as an alternative. This will allow assuming possible increases in demand or unforeseen drops in the supply or provision of services.
• Gather as much information as possible about your potential suppliers. Check out their websites and social media. In the latter case, read and rate their content to verify their knowledge and experience in the area in which they specialize. Visit them or request a visit from a commercial to your company; You can also ask for advice through the support channel. Find out what other organizations they supply goods and services to; check the testimonials of these clients on the website or contact them directly. All this will help you check their quality, responsibility, and reputation.
• You should also consider the location of your suppliers. Keep in mind that the shorter the distance from your base, the easier it will be to reduce delivery times. On the other hand, it will also be possible to minimize logistical eventuality.

Take Into Consideration The Value For Money When Purchasing From Suppliers.

According to estimates, a saving of just 5% on purchases can increase almost a third of the organization’s profitability. Even if you need to reduce costs, you must still maintain or improve the level of your products. The idea is that you choose the fairest offers for purchases from suppliers according to your quality requirements. Sometimes cheap is expensive, and the most costly is not always the best.

Planning Is Decisive in Saving on Purchases From Suppliers.

If you have an ERP ( Enterprise Resource Planning ) solution to monitor your supply chain, you can know and manage your supply on time. Otherwise, it is necessary to always plan it based on reliable demand perspectives to have the quantity required in high and low seasons. With this, in addition to saving on purchases from suppliers, it is possible to avoid warehouse saturation.

Based on this, a well-managed purchasing plan includes three basic actions:

A complete list of all the necessary supplies and services

That is a detailed list of raw materials, parts, and consumables for the maintenance of machinery and tools that guarantee the organization’s operation. In this relationship, communication resources and Internet connectivity cannot be lacking in ineffective contact with suppliers, customers, and points of sale.

It is also essential to consider the safety equipment for the personnel there. It is important to note that the new normal after the coronavirus pandemic requires companies to supply PPE to their staff. With this personal protection equipment, it is possible to reduce contagion risks, which would avoid costly casualties of collaborators.

Specifically, this list must include all essential external supplies and services for proper planning of budgets and payments in order of priority.

Monitor supply logistics after purchases from suppliers

Once the required supplies have been defined and payment conditions have been negotiated, it is critical to coordinate delivery logistics with the corresponding monitoring of the process. For this purpose, it is essential to have at least one person from the purchasing or administration department in charge of this follow-up.

This collaborator must maintain communication with the supplier and check with his help the cargo itinerary. In parallel, it will evaluate the effectiveness of the supplier in terms of delivery times and conditions of the supplies.

Manage the warehouse

Without a doubt, another basic rule to save on purchases from suppliers is to control the stock properly. It will be of little use to us to comply with the two previous premises if we are not efficient in managing supplies after they arrive at the warehouse. Indeed, the management of resources in a company includes employees’ awareness of the rational use of supplies and tools.

But it is also essential to study all the processes and procedures to constantly optimize them, seeking to save and improve the employee experience.

Establishing a Win-Win Relationship is Vital When Purchasing From Suppliers.

Finally, it is essential to remember that ideally, those who guarantee supplies, rather than suppliers, should be our partners. In other words, it is advisable to establish a relationship of trust with them based on constant communication and negotiations that meet the expectations of both parties. This helps us build solid links that make cooperation viable both in prosperous times and in tough times like the present.