Spending Dollar$ to Save Dimes
Today’s task list is long. You’re looking to save time and money, but fighting to fit 12 hours worth of work into just 8. “Do More (jobs) with Less (time)” is the familiar mantra of today’s business world.
Shopping prices for every purchase can be tedious, time-consuming and often costs more than it saves. In business, time is money. Shopping takes time. Cutting multiple POs. Receiving multiple shipments takes time. Processing multiple invoices take time.
Are you spending dollars to save dimes? What if all this time was spent growing your business instead of tightening your belt?
What can we do differently in 2016 to make sure man hours are spent finding the best value not just the lowest nickel?
PRICE: Just half of the story
Of course saving money doing a competitive price research is important. Consider that it may be even more critical to find a reputable distributor of the products your workplace needs and uses; one consistent in customer service, price, value and reliability for every order.
Finding one size does not fit all because every business has unique needs. And price is not your only chance to save money for your company. In fact, it’s only about half your opportunity to reduce your true cost of supply.
COST: The Other Half
While price savings can be fleeting, savings achieved in the total cost of supply are constant and significant because, in business, time really is money.
In Business, Time is Money.
Purchasing professionals say any item’s price is approximately 55% of the total cost of supply, which includes time spent selecting, finding, shopping, ordering, receiving, distributing, accounting and processing payment. These expensive components, plus price, make up the true and total cost of acquisition.
Eight Steps in the Procurement Process
The global business consultancy, The Hackett Group indicates that the cost of processing and paying an invoice averages just under $25.00. So that $10 you saved on toner from a new vendor just cost your company $25 just to pay the bill.
Finding the best value is good business. Shopping for the best price on big-spend items makes sense. But incessant shopping to save a few pennies in a category with little impact on your bottom line is spending dollars to save dimes.
For these categories, my recommendation is to foster a relationship with a vendor you can trust to serve the best interests of your operation. Review your vendor every so often but in between reviews trust their mutual interest in your success.
As you mull this information around, think about how you and your company can take more steps in experiencing soft and hard costs this year. Coastal customers who are utilizing our Home Team Service are already one step ahead. The service cuts your total cost of acquisition from first-need to final delivery.
And our new partnership with the Regency group brings powerful new opportunities to deliver significant cost savings up and down your supply chain. This includes having access to an unprecedented array of business supplies and services, with one website, one delivery and one invoice to streamline your acquisition processes.
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