5 Procurement Tips for Small and Medium-Sized Enterprises (SMEs)
For SMEs, procurement is a process that requires a lot of attention. Without proper management, it could swallow up their money, whereas they’re looking for ways to reduce costs. Reducing purchases might help them cut down operating costs, but this step could backfire on their sales and revenue. Therefore, smarter ways are required to help SMEs keep their procurement under control while saving costs. Check out these easy tips!
1. Demand Forecasting
To avoid excessive or unnecessary purchases, demand forecasting needs to be undertaken. This can be done by analyzing your sales history to identify the most and the least popular products. You also need to pay attention to the current trends, so you can decide whether or not you should buy new products.
2. Inventory Level Optimization
In addition to knowing the number of items need to be purchased, procurement managers also need to know when they should order from suppliers. Therefore, inventory tracking is very necessary in this process. It helps you find out which items are low on stock, so you can place orders immediately. An inventory management system will greatly help you in this regard, since it provides automated reminders for low stock items and it allows you to keep track of your inventory levels through real-time data.
3. Quality Inspections
Defective and damaged goods won’t generate profits for you. To avoid losses due to disposal of goods, quality inspections have to be conducted regularly. Thus, you will be able to spot which items are easily damaged so you can think of prevention strategies later on. If the problem is in the storage area, then you can move the items to a safer place. Henceforth, you can also replace the vulnerable items with the ones that have better quality.
4. Automated Purchasing System
There is no better way to control your procurement than automating the process. By implementing an automated solution, you won’t need to worry about unnecessary purchases or supplier lead times, as the purchasing management system allows you to make purchase orders according to your needs, analyze your budgets, monitor the status of your orders, and a lot more.
A good purchasing management system can be integrated with your inventory management software, so you can immediately make purchases once you get low stock alerts. The integration lets you buy the right amount of goods that match the demand. While automated solutions may sound very expensive for SMEs, there are a lot of them that are specifically priced to suit SMEs budgets.
5. Healthy Business Relationships
Suppliers can make major contributions to your profitability. When suppliers are happy to work with you, they will very likely give special prices to you in the future. The negotiation process between you and them will become easier and smoother. You might also get faster information regarding to their latest products.
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7 Effective Warehouse Management Tips to Optimize Inventory Control