How to purchase effectively
- 1 Make purchasing part of business planning and budgeting and consider purchasing issues when developing products and planning production.
- 2 Focus on high-priority purchases - those on which you spend most and those which are most important to your business.
- 3 Decide how to organise purchasing, and who will be authorised to purchase which supplies; set individual purchasing limits.
- 4 Specify what you need, such as product features, quality and reliability, delivery schedules, guarantees and support.
- 5 For asset purchases, identify lifetime costs (eg maintenance and consumables); consider alternatives such as outsourcing, purchasing secondhand and leasing.
- 6 Identify potential suppliers; ask for recommendations.
- 7 Get quotes based on your specification; compare them in terms of the factors which matter most to you.
- 8 Investigate the reputation and financial stability (for a long-term relationship) of your favoured supplier; if appropriate, ask for references.
- 9 Negotiate pricing and terms and agree the contract.
- 10 Introduce systematic ordering for raw materials and other consumables, based on stock levels and forecasts of supply needs.
- 11 Set up systems for checking deliveries and dealing with errors, for storing and monitoring stock and for handling invoices and other paperwork.
- 12 Consolidate purchasing with a small number of suppliers but avoid over-dependence on a single supplier.
- 13 Build relationships with key suppliers; keep them informed of your needs, and co-operate to handle problems and suggest improvements.
- 14 Regularly review supplier performance on key issues such as quality, price, reliability and service; keep track of competing supply offers.
- specify what you want
- compare different offers and suppliers
- set up systems to handle orders, deliveries, storage and paperwork
- build relationships with key suppliers
- purchase on price alone
- become over-dependent on one supplier