The purchasing process is probably the most under-looked part of every business which eventually leads to increasing costs, wastage and inefficient workflow. A streamlined purchasing process can, however, work wonders for your company irrespective of its size.
You could be one of those designers who sell their designs online and need various materials like fabrics, threads, buttons, and laces for your dresses. Or you could be a large online retail fashion store that sells branded outfits and merchandise.
The one thing that is common with both these business models is the regular need of supplies. This calls for a streamlined purchasing process.
However, it is not possible to go from one place to another, knocking on the doors of each vendor to negotiate a deal. This leaves you little to no time to concentrate on other aspects of the business. You could however, make this aspect of the business work seamlessly with little attention with the help of technological tools available today.
Consider an e-procurement system for your purchasing needs. E-Commerce solutions aren’t just making the lives easier for customers but for many businesses as well. Like many customers who choose to shop for their desired items online, a company could too join the bandwagon and seek potential suppliers straight from the computer screen. What that means is that B2B business models too can now ride on the wave of online shopping with the help of Punchout Catalogs.
An e-procuring system like SAP or Ariba can help you automate the process of purchasing materials. What these systems do is that provide a plethora of suppliers to you that deal with the kind of materials that you would need for your business. Look for suppliers that offer punch-out catalogs on an e-procurement system. You will be able to link to their products directly from within your purchasing system. You can connect to various suppliers directly from the e-procurement system which eliminates the need to visit their own sites which is undoubtedly a less efficient method of purchasing.
Adopting e-procurement systems with Punchout Level 2 Catalogs will also make the purchasing process work seamlessly as you will no longer need to search extensively through the catalogs of each supplier individually. This also helps in saving crucial time which you can invest in other more prominent areas of your business.
How this works: The software will help you raise a request for materials along with specific terms that need to be fulfilled by your supplier. The suppliers will then be able to send you personalized catalogs depending upon your requirements and number of units. You will then be able to browse the specific product catalog that you are looking for instead of browsing through an entire library of products available on the supplier’s website. After carefully selecting the products and adding them to your cart, you can then forward the order details to the concerned individuals of the company who will then approve your purchase. This translates to better efficiency in the purchasing process.
The software will also automate follow up e-mails to the supplier to ensure that your deliveries are on time. It is a much more efficient way of purchasing than keeping multiple records on a spreadsheet.
Other tips for a streamlined purchasing process include:
Take Note Of All The Issues
It is advisable to take written notes of all the problems that you have been facing with your supplies. Taking mental notes makes us forget to solve these issues when we need to cater different aspects of the business. Jot down all the points that you believe are potential issues that have been hindering with your purchasing process. Take appropriate measures to solve the problems so that business can run smoothly in the future.
Separate Banking For Personal Use and Business
One of the best things you could do to manage your purchasing process is to separate your personal and business bank accounts. You could apply for a business account for your company and claim the benefits that the bank offers a business.
Since the Income Tax Department demands the deductions for personal and business transactions to be listed separately, a business bank credit card can help in the efficient maintenance of all records which will also be sorted by category.
Consider a Formal Purchasing Policy
If you are someone who often had to deal with irresponsible suppliers and their unprofessional methods, then you should consider having a formal purchasing policy. Put in everything that you require from your supplier – the volume of the materials required, the intervals at which it is to be delivered as well as the quality standard. This will establish you as a serious buyer who makes no compromises when it comes to supplies and likes to have it written.
Consider having information like – the criteria you use to assess the supplier, the number of quotes you solicit for the prices, and whether you have processes for quality assessment if need arises. Additionally, you can also use this opportunity to tell the supplier that you evaluate supplier performance after regular intervals.
Appoint A Purchasing Team
This tip works exceptionally well for small businesses. If you are a small time business owner that is responsible for everything from purchasing and manufacturing to selling the product, it is likely that a few things start getting lesser attention than they deserve. It might not be your fault at all. It is natural to expect a smooth purchasing process with your long-time suppliers, to concentrate on other parts of the business.
However, if you appoint a small team of people that are exclusively responsible for purchasing part of things, they could work efficiently in exploring the market at regular intervals to look for new vendors that are cost effective for the business. A longtime supplier is likely to take things for granted and provide average quality of products when there is no competition. This takes a hit at your business when customers report dissatisfying experience.
A business with a great model is even prepared for unseen circumstances that can occur in the future. For instance, an ice cream shop needs to be ready for the busy summer season ahead when it cannot afford a delay in the supplies and might want to have extra stock in the inventories. This applies to all the business. Even on e-commerce platforms, one can take the help of various integrated online ordering systems that provide better visibility of the future.
Keep an Eye on Market Fluctuations
If your e-commerce business has anything to do with manufacturing, then there is a possibility that the prices of raw materials might increase abruptly. One would typically want to stock up some extra materials the prices of which are expected to go up in the future. However, depending upon the nature of your business you could choose to buy lesser than usual in small intervals till the prices come down. Meanwhile, you could start charging your customers a little extra to make up for the price increase.
Price Is Not The Only Factor
This is the rookie mistake many first-time business owners make. They only compare the costs that the various dealers have quoted when choosing a supplier. This isn’t a good practice at all. These suppliers are your permanent partners that are going to be responsible for an entire part of your business. Make sure you research extensively and choose someone that will never leave you hanging in a tedious situation.
In fact, work with more than one supplier so that you can depend on your alternate guy in case your preferred supplier lets you down.
Contracts With Regular Suppliers
This is recommended only for necessary items that can hinder your workflow if unavailable. If you are repeatedly making purchases from a supplier, it makes sense for you to have a written contract with them for seamless purchasing procedure. You can mention set quantities in the agreement that are to be delivered to you after regular intervals.
This will eliminate the need to order the basic product each time when the stock replenishes. It will also help in keeping a better record of the inventories.
These abovementioned methods have proven to work to make the purchasing process seamless. Purchasing is a critical part of your business which is often paid little attention in order to make up time for other prominent areas of the business. However, streamlining your purchasing process can significantly improve the revenue of your business. You can start by paying attention to the small details that earlier might have gone unnoticed like the behavior of the supplier, their delivery process and the workflow.
Technology can take things forward as well. Major players have already adopted e-procurement systems and it is a matter of time till it becomes the industry standard. You should consider joining the bandwagon as early as possible to stay ahead of the competition. It will help in automating the purchasing process which will eventually save you crucial time, thus making your life easier.