Cost conscious or purchasing best practise……which do you do? Ideally, you should be doing both!
I talk to a lot of clients who tell me that they’ve got their costs under control. Every £ or $ gets scrutinised and all personnel are required to find the best deals before buying even the smallest item. That’s what I call cost conscious and it is definitely to be both applauded and encouraged.
So what value does best practise purchasing add beyond that? Let’s take a simple stationery example.
You are buying a box of 50 pens every week so that your 15 personnel all have the tools to complete the checks and record pertinent information as they go about their day to day job. It’s not a huge amount of money and one member of the office team is taking the time to buy the pens – online or from a shop – each week. They are doing their best to make sure they are the cheapest box of pens that they can find.
Someone with a purchasing mindset would look at this example and wonder ….
- Whether the volume could be aggregated and this should be a monthly or quarterly order?
- Whether the specification could be reviewed and all of the monthly ‘sundries’ could be purchased in one go in one order? Stationery, toilet rolls, handwash, hand towels, tea, coffee, sugar. And if purchased like this could that revised specification attract discount? Amazon offer a subscription service for repeat day to day items; the more your order, the more they discount.
- Whether changing the pens might make them less attractive for use outside of home? Children can often use black and blue pens at school……less so red pens.
- What is the total cost of buying the 50 pens per week including the time to place the order, to reconcile the petty cash/credit card statement/receipt, to monitor stock levels?
- Whether the pens need some demand management? How can 15 personnel be consuming 200+ pens per month? Now here’s where it starts to venture into best practise policy. I’m not a fan of having a Stationery Police Officer in the office, and I’m not sure it’s a role that anyone relishes doing either. If someone asks for a pen to do their job…..how does the Stationery Police Officer say no, and how much more has the pen cost the company for disrupting the Stationery Police Officer from their other duties to sign a pen out? But what if you updated your policy so that each member of staff is paid a few extra £ or $ per month to provide their own stationery? This doesn’t work for big blue chip organisations but for your 15 employees….just maybe. I wonder how many pens might get consumed as a result of this policy, and how much less plastic might be consumed in the process?
Suddenly you realise you don’t need to be a big organisation to benefit from purchasing policies and purchasing practises, even on pens. Extrapolate that out to your total 3rd party spend and the savings can really start to rack up.
How do you keep your company both cost conscious and up to date with best practise purchasing across everything that you buy? Let me know in the comments below!