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Purchasing Cost Reduction Ideas

Planning for the purchases is one way to reduce the cost. Many corporate managers and executives are looking for cost reduction ideas that they can use.

However, the ideas can only be effective if done properly.

Every business owners and even the manufacturing industry want to save on their purchases. Purchasing or procurement of commodities plays a big role in any kind of business. Fortunately, nowadays the government has created a governing authority that provides guidelines regarding the procurement process and this is good news to all business owners. However, suppliers and vendors also play a great role in purchasing cost reduction. Obviously, the raw materials and services are the main factors that determine the cost of purchases. Keep in mind that one factor that can help you survive during the lean time is to cut the cost of purchases. Here are some cost reduction ideas that you can use when purchasing commodities.

Buying Ideas

When buying commodities it is necessary to purchase in volume. It is because bulk buying can help you reduce the prices and eventually reduce the cost of purchases. You can plan purchases between six to twelve months in order to obtain big savings in your procurement. Likewise, you can also buy commodities that are not in peak season. This means that you should place your order when the prices of certain commodities are low. In addition, you can also reduce the purchasing cost if you will buy commodities and raw materials from areas that offer tax holidays. You can browse online and search for states that provide tax heavens during tax holidays.

Right Choose Of Vendors

When purchasing you should also take into account the location of the supplier or vendor you intend to purchase. This is another bright idea to reduce the cost of purchasing. Mainly because buying from local vendors would mean low freight cost. Likewise, you should also establish partnership with your frequent suppliers. Make sure to establish partnership with suppliers assured of business. In addition, choosing a vendor that ensures high level of service is very important. Vendor who uses the Vendor Stocking Program would help you in reducing the cost of inventory. In like manner, you can also ask supplier if they can give you discounts. Oftentimes, discounts are given when buying commodities in large volumes.

Electronic Procurement

This is the most updated manner of reducing the cost of purchases. Aside from reducing the cost, this procurement process also saves your time in travelling from one supplier to another. All you need to do is to browse over the internet and look for the websites of different suppliers. The good point about this mode of procurement is that you can have the big chance to save money because the supplier who tends the lowest price will take the order. However, before you award the order, you should review and compare the prices as well as the commodities.

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1 Comment

  • Mr.Ajmal Mahumoothu said on July 27, 2013
    Scientific and Medical Equipment House, Olaya City, Saudi Arabia.

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