Every business needs to buy a variety of products regularly in order to stay functional. While some businesses need to buy supplies more often than others, that rule is true for every industry. Unfortunately, managing purchases can also take a lot of work. Mistakes, such as duplicating a purchase or missing an opportunity for a discount, can waste a lot of money. Forgetting an order can easily lead to lost productivity if the business can’t function without those supplies. Those risks mean that anything which has the potential to simplify the purchasing process and eliminate the risk of errors is valuable for a business.
1. Standardize Orders and Contracts
Variety is the spice of life, but there are times when it’s better to have something that is bland, consistent, and functional. Businesses that don’t have standardized processes for dealing with situations force their employees to improvise, which increases the chance of making a mistake, according to Platforms & Ladders. It can also inhibit coordination in teams that involve multiple people, since each worker will be relying on their own method. When coordination and communication suffer, the number of mistakes that get made will inevitably surge.
Fortunately, standardization is relatively easy. All that the business owner needs to do is to look at the methods that are already in use, make a step-by-step guide to carrying them out, and make sure that everyone follows those instructions. If the business is using multiple methods, simply pick the one that seems to get the best results.
It’s unlikely that any plan will be perfect when you first put it into action, so be sure to regularly look at your methods and try to find ways that improve them. If any problems arise during the purchasing process, make a note of them and try to find a way to prevent those problems that you can add to your standard procedure. Employees will still need some latitude to deal with unexpected circumstances, but any degree of standardization will have a surprisingly large impact on your business.
2. Automate the Process
Humans tend to make more mistakes than machines. In most cases, their time is also more valuable. That means that you can both save money and simplify your supply chain by letting computers handle your purchases for you. There are a huge number of computer programs that can help with this process, and they’re all designed with different roles in mind. It’s important to do your research to make sure that you choose the right program before you settle on any sort of automation. When in doubt, look for reviews from similar businesses to help guide your decision.
Naturally, not every purchase can be automated. It’s impossible to automate purchases that only need to be made once. Automation is best used for products that need to be purchased regularly and in consistent quantities. Additionally, it should only be used after a few purchases have been made from a supplier without any problems. That prevents automated orders from going out to a supplier that is prone to making mistakes, which can lead to wasted time and money.
3. Consolidate Your Suppliers
The complexity of a business’ purchasing system is proportionate to the number of suppliers on which it depends. Buying products from multiple suppliers means keeping track of the prices and availability of multiple companies. It also that workers need to spend slightly more time looking up companies to see which one should receive a purchase.
This problem is at its most extreme when a business purchases similar products from more than one company. There are perfectly legitimate reasons to do so. For example, it may be necessary if neither company can provide enough of the product on their own. However, the added complexity means that it is a situation which every business should strive to avoid. Instead, identify the supplier that offers the best deal and buy everything from them. It’s reasonable to keep track of other potential suppliers as a backup, but it’s best to avoid calling on them.
There are situations that can complicate this decision. For example, suppose that you need to buy two products, and there are two companies that offer both of them. Each company offers a low price for one product and a high price for the other. Your business saves money by buying the cheap product from each company, but it simplifies the supply chain by buying both products from a single supplier. In that case, the simplification may be worth less than the savings. The right choice in this situation depends on the details, so the manager should always analyze the situation carefully before choosing to eliminate a supplier.