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When you’re making purchases for your business, there is a range of factors you’ll think about, from where to source, the pricing, how those purchases will impact your forecasting, and ultimately how making these decisions thoughtfully can save your business time and money. According to a report by the Logistics Bureau, businesses with optimal supply chains can have on average 15% lower supply chain costs, reduced inventory holdings, and faster cash-to-cash cycles than those not focused on supply chain optimization. Let’s explore some ways you might optimize your business purchases for your own business.
Consider what you need to buy
First, consider what you might need to operate your business. Forecasting what types of purchases you need to make can help you better plan for how they will be implemented and how much money you need to set aside.
Before you get started looking for sourcing options, think about these factors:
- What do you need? What you need can range from raw materials to fully produced products. This may mean you are sourcing the raw materials or producing them yourself before creating your products. It could also mean you’re working with a manufacturer, wholesaler, or other supplier.
- How much do you need? Considering how much you need ahead of time can help avoid overspending. If you order too much you may not need to use all the product. Similarly, if you don’t order enough, you may incur fees for more orders of the same.
- When do you need it? Some purchases could mean longer lead times, so you may need to place orders in advance. You may also need to make purchases in time for seasonal demand, such as Mother’s Day, Graduation, Halloween, or Christmas.
Streamline your sourcing
When you’re looking for ways to source your business purchases, there is a range of suppliers to choose from. Do your research ahead of time to make sure you are optimally sourcing for your business needs.
- Manufacturers: Manufacturers produce goods from raw materials. They can help you design, produce, and deliver finished products. Sometimes manufacturers sell under their own brand name, a private label where they will make products only for your business, or a white-label product that several stores may carry under their own brand names.
- Wholesalers: Wholesale businesses typically buy goods in large quantities from suppliers and sell them to retailers or businesses. They can often provide storage and logistics as well as favorable rates in exchange for bulk purchase orders. Many business owners use this as a way to start a business quickly, as distributors will already have an infrastructure ready to turn around the products your business may need quickly.
- Distributors: Distributors buy products from manufacturers and wholesalers. They provide delivery services, and some even can help you market your product. They often specialize in logistics within a certain geographic area.
Relationships can be key to locking in the products you want at the prices that make the most sense for your business. Each of these ways to source come with pros and cons — perhaps one is faster but at a higher cost, and another less costly but you might find yourself with much more inventory.
Determining a fair price
A fair price for products depends on the type of item and the market conditions. You may be able to negotiate favorable rates with suppliers that you form relationships with. While it may be more labor intensive, it may also be more cost effective for you to take on more of the work in-house, offsetting some of the business purchasing costs.
Once you’re ready to make your business purchases, start planning ahead for how you will distribute and sell your finished goods. Whether you sell in person, online, or through a marketplace or a trade show, there are a multitude of ways you can start selling your products.
This month/year? Square is partnering with Walmart Business to provide a limited-time offer for sellers upgrading to a WalmartBusiness+ membership. This offer includes a 90 day free trial for Square merchants. Walmart Business offers a customized shopping experience, product assortment and tools tailored to small and medium businesses and nonprofits. Customers can share payment information, order history, and purchasing power across teams. This membership costs $98 a year and includes these benefits:
- Free shipping with no minimums.*
- Free delivery from the store with a $35 minimum order.*
- Review insights such as spend by user, top category spend, items, and more with Spend Analytics