All for Joomla All for Webmasters
January 20, 2018
You can use WP menu builder to build menus

The Economics of Procurement

Jun 18, 2017

For a business, especially one in the industrial sector, procuring supplies is an ongoing hassle. There are two basic kinds of components that you procure for your business: tools and materials. Tools are the things you and your employees use to make the goods or services that you sell, and are part of an initial investment. Next, you have to spend money to buy more tools as new needs arise. You also might have to buy replacement parts for tools that might malfunction, which can be seen as ongoing expenses.

Ongoing Expenses

 

In addition to tools, you have to buy materials. Materials are the raw goods that you turn into the products or services that you sell. For example, if you run a machine shop, your tools will be lathes, CNC machines, and so on. Your materials will be the raw sheet metal and pipe that you turn into finished products. You’ll need to buy new materials consistently; in fact, that burden will grow as your business becomes more successful. You’ll be spending hundreds of man-hours procuring both tools and materials. Such procurement is a waste of time and, in business, wasting time means wasting money. Your best option is to hire someone to procure these items for you.

Hire Someone

Hiring someone to procure items for you is the most efficient way to use your time and money. You need to make sure you hire a great company such as Ardvik. You need a company that has a history of procuring items. There are dozens of different suppliers for just about every tool or material. Furthermore, the internet age is rapidly diversifying the possible sources of such materials. In the past, a company in Leicester would buy supplies from suppliers in and around Leicester. Nowadays you can procure supplies from Leicester, Los Angeles, or Luxembourg. The possibilities are endless.

Those expanded possibilities also make it much more likely that a company is selling a low-quality product. Such low-quality products mean that you’ll have to spend even more money and time finding good supplies at a good rate. That is unless you hire experts in procurement to find these items for you.

The Economics

Choosing procurement professionals is a matter of arithmetic. You’ll need to analyse how much money you spend procuring items every month. This amount is not how much you spend on the actual items, but how many man-hours go into the procurement every month. Then you will need to compare that amount to the rates charged by procurement professionals. You should also keep in mind that every man-hour you spend on procurement is costing you double since that’s a man-hour not spent on something more useful.

Finally, once you’ve done that math, you will see how much money you can save by hiring a procurement professional. You should keep in mind that a procurement professional will also have access to and knowledge of some of the best and most affordable suppliers in the world. If they have been in the business of procurement for some time, they’ll know which suppliers to trust, which will end up saving you even more money.

Read More