Using a single source supplier for indirect business sundries procurement

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Why Should I Use a Single Source Supplier for Indirect Supplies?

So why consider a single source supplier for buying all your business sundries? Every active business will generate repeat requirements for various items, sometimes referred to as ‘indirect supplies’, ‘indirect materials’, ‘overheads’, ‘goods not for resale‘ among other terms.

These can range from the humble staples in the drawer to important PPE. But in its way, it’s all-important as collectively they enable your business to operate. It touches the post-room, office, janitorial supplies, bags, packaging as well as fixtures and fittings. Such expenses may be considered too low-value and insignificant to be worthy of the time spent scrutinizing them – bracketed as ‘petty cash expenses’. Yet surveys reveal at least 20% of all expenses being in this category have much potential for economies and ultimately savings to be made.

The Hidden Costs of Procurement

When savings are called for, higher line-value items are more likely to be targeted for price reductions, with undue time spent trying to secure the best price from several sources. The number of suppliers tends to increase in these instances and sometimes as a result, inconsistent quality of received goods, as well as a lack of visibility on overall spend.

Without conscious effort or control, supply chains for expense items naturally become unnecessarily complex and the sheer volume of low-value orders makes it harder to track what is really going on. There can also be resistance to change, the mind-set of “we’ve always bought it this way”. A change in the way of thinking is vital to the success. Rather than focusing on individual items, you need to look at your pattern of buying month-on-month and work on lowering this overall figure. You could approach it in the same way you would your domestic weekly shopping list.

Customers tell us about the nightmare of getting this type of ordering right. Running out of items they need “we can’t put in an order yet’, panic buying “we can’t run out again” over-ordering ” I didn’t know it was already on order”. Unauthorised buying, maverick spending and more – sound familiar? There is a way to make this a whole lot easier!

Steps to Unlocking Savings Through Single Source Procurement

So, what can you do about this lack of visibility and accountability on a good 20% of your budget? The recommendations could be as follows:

  • Arrange for an assessment of your existing processes
  • Receive and discuss proposals for saving time and money
  • Investigate the benefits of a single source bespoke buying portal that has all the products you need available. (This is your shopping list of business sundries that keep you operational every day. Your photocopier paper, ink cartridges, tea, toilet roll, hand and surface sanitisers etc.)
  • Agree your product list and roll-out the portal firstly to management and then to your buyers

Getting True Visibility of Business Sundries Procurement

Do you know your cost per transaction?

Maybe you took the arbitrary figure of ‘about £50’ from The Chartered Institute of Purchasing & Supply and assumed it would apply to your organisation? In which case you could be well wide of the mark. To drill down is not an easy task and requires analysis of the whole process from concept to completion, adding in the monetary value of time taken to search for the items, to gain permission, placing the order, receiving, unpacking and paying for it.

Maybe some items are then redistributed to your satellite sites at a further cost in time and transport. Once you know the spend and frequency (be prepared to be surprised!) you will have the ability and the means to now take steps to drive that figure down. This can be achieved by streamlining the procedure.

What steps need to be taken to make the procurement process quicker and more efficient?

If fewer people need to be involved in sourcing and decision-making and if fewer suppliers need to be contacted and paid – staff can be released to spend time on other, more proactive tasks. These days we like to view our operations in terms of CO2 savings too.  So by arranging fewer deliveries from one supplier will move your operation nearer to your Carbon Neutral goal…something staff and management will readily buy into. And by reducing your carbon footprint you will probably win bonus points with your customers too. Make sure they know about it!

How to Buy Better

At a time of increased costs due to necessary funding for extra sanitising, PPE and implementing social distancing measures in the workplace, there may be no better time to get a grip on the cost of your supply chain relating to Goods Not For Resale.  Single Source Supply is not new and has been embraced by all manner of organisations for achieving or regaining control and visibility of expenditure.

By empowering staff to order from a pre-defined range of products at agreed prices and availability (which may even involve holding stock exclusively on your behalf) there are no invoice surprises at month-end. All that is required from management is the final overview and then to sign-off by the pressing of the approval button. Once the order is placed, responsibility is shifted to the trusted supplier to come up with the goods quickly and efficiently. So what are the benefits of single source procurement for business supplies? Read the points below:

  1. Placing more business with fewer suppliers can elevate you to valued customer status, enabling you to make the most of your own buying power.
  2. Take advantage of the buying power of your supplier (who may well be part of a buying group that you could never conceivably join on your own).
  3. Most likely you will be assigned to a single point of contact or dedicated team, so not dealing with just whoever answers the phone and does not know you or your set-up, resulting in a collaborative partnership
  4. Consolidation will lead to improved management reporting, greater visibility and accountability. The reduction in process time and related administration will yield hidden yet worthwhile savings.
  5. Buy what you need when you need it will free-up valuable storage space, while the back-up stock is held in the supplier’s warehouse. (Don’t forget to add that cost-saving to the monthly/yearly overview!)
  6. Include all your custom-printed stationery in the mix, this can be another addition to your weekly/monthly orders to multiple sites. All types and sizes of labels, signs and promotional material can be held available for distribution nationwide.
  7. Keep tabs on hygiene and PPE too and stop staff in production sapping “popping out” for bits and pieces, spending more than they need to and avoiding the petty cash slip headache!  Single source can help you win your day back!

Making Single Source Procurement Work For You

In summary, logistics or fulfilment is best left to the Single Source experts. The people who handle orders of diverse items to diverse sites on a daily basis. Make the most of their years of experience in sourcing to get the best deals in both branded and unbranded products. Receive parcels of manageable sizes and containing manageable quantities. Cultivate a collaborative relationship with your supplier, enabling both parties to achieve positive outcomes.

For example, help to refine and improve the ordering on your web portal to achieve a better shopping experience. Remember you would be able to see ALL orders for agreement, alteration or refusal before anything happens. This eliminates completely time wasted trying to correct expensive mistakes that have occurred due to misunderstandings etc.

It will be easy to imagine placing just one fewer order per month (potentially saving “at least” £600 per annum in admin costs alone), but what if you placed 1 fewer order every week, (saving a notional figure of some £3,000) What’s not to like about that especially today, more than ever – every single penny counts!

Want to find out if single source procurement can work for your business? Our clients include merchants, high street retailers, garden centres, charities and more, – all of which have found benefit in this procurement model. Drop us an email using the form below and see how much your business could save!

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How can I make my supply chain stronger after Covid 19?

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Perhaps we had not realised quite how fragile our houses were until the metaphorical wolf appeared without warning and threatened to blow them down. As the UK comes out of Covid 19 lockdown, we can reflect, learn, and evolve, by identifying structural supply chain weaknesses. We can replace sticks and straw with stronger foundations and some solid bricks.

What was the impact of Covid 19 on the supply chain?

Covid 19 arrived without warning and many businesses were unprepared. Dependency on centralised Global Supply Chain models and low-cost production overseas, meant that when the factories in China closed, shortages were experienced across the world. Everything was affected, from raw materials to finished goods, from PPE to toilet rolls on the supermarket shelves. These all became difficult or impossible to source, pushing prices north.

Whilst large parts of the world are still fighting to control the spread of Covid-19, those Countries coming out of lockdown are beginning to look ahead. Now is the time to prepare for future events that could compromise Supply Chains again. These could be a new wave of Covid 19 infection (which the WHO believes to be a strong possibility) other unforeseen pandemics, Brexit, Climate Change, or Geopolitical tensions.

Building resilience into your business

To strengthen Supply Chains, businesses are now looking to balance cost control with risk. To achieve this, it’s key to measure the potential risk to supply against cost savings made when sourcing goods and materials from low cost Countries.

Reliance on just-in-time centralised supply chain models may have bought operational savings that businesses and consumers have historically benefited from but they also represent a measurable risk. With supply in a Globally destabilised climate like the one we have been experiencing during the Covid 19 crisis – the value of which can be translated into monetary terms through lost production and lost sales.

Reduce your risk

Here are some “risk-reducing” ideas to discuss with your supplier to reduce your exposure:

  • Ask how their own sourcing has changed involving domestic and global procurement networks. See how they are spreading the risk of future interruptions in supply and production. Investigate the benefits of a Parallel Supply model. This works by increasing the percentage of goods produced and sourced locally, moving some of current reliance from off-shore sourcing to near-shore countries.
  • Use new technologies to measure Supplier performance and risk. Sourcing and production from off-shore and near-shore countries needs to be properly tracked, certified and controlled. This will not only to reduce risk to Supply Chain availability and quality, but also protects against unethical practices such as exploitation of low-wage workers.
  • Is your supplier taking practical steps to reassess their inventory? Replacing old stock with a supply of “business critical” goods in order to ride any future storms, satisfying customer demand until such time as sourcing and production can be near-shored or bought in country.

Business critical supply

Your provider should be able to demonstrate their ability to supply our customer’s through any new tough times that may be ahead, whilst continuing to offer value for money.

We also recommend that our customer’s look at what their “business critical” supply needs  are to ensure good stocks are maintained. Where possible we would recommend that our customer’s keep some vital stock in local reserve. Talk to your provider about the following:

  • providing product usage reporting to help you identify and forecast “business critical” supply requirements
  • sharing the burden of storage, see if your supplier can hold your stock free of storage charges
  • PPE for replenishment with consistent pricing and lead times

These are just a few of our thoughts on the subject of how to reboot Supply Chain after Covid 19, but we would love to have your feedback. Please send any comments or questions through using the form below.

Get in touch to find out more!

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Making the most of your GNFR spend

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GNFR can typically represent over 25% of a retailer’s operating cost. That’s a significant investment with no direct income generated from this outlay. Whilst Goods For Resale (GFR) undergoes intense scrutiny to ensure the best possible returns, cost optimisation for GNFR, in the most part, is rarely approached in the same manner. What does this mean? A huge opportunity for retailers!

Making the most of your GNFR strategy is not just a case of simply clamping down on costs and slashing budgets – it actually requires an entirely different approach. Embracing a holistic attitude is key to its success as this needs to be championed across the business. Harnessing the power of optimising GNFR and adopting best practice can deliver real savings.

What is GNFR?

There is a misconception that GNFR purely consists of simple products such as carrier bags or cleaning items – it is actually more far reaching than that. A typical retailers GNFR shopping list could look something like this: packaging, first aid equipment, safety clothing, kitchen and bathroom essentials, anti-theft devices, stationery, POS/check out systems, branded consumables, signage, labelling, shop fittings and merchandise display solutions.

The scope to save on valuable resources such as time and money are considerable. The reality is that a retailer could be working with a huge number of suppliers to achieve this ‘shopping list’, having to negotiate costs and terms, organising product research, purchase orders, deliveries, invoicing, returns a multiple of times – when time is money, is this really the best approach?

Creating Order out of Chaos

Consolidating the whole procurement process can dramatically free up internal resource as well as driving down hard and soft costs. All product expenditure can be ratified and sourced through one preferred supplier. The associated hidden ‘soft costs’ (administration and procurement process time) can be virtually eliminated. The price paid for products ‘hard costs’ can also be reduced as well as delivery expenditure. Receiving products with one delivery with one invoice from one supplier can save thousands of pounds a year.

Finding a supplier with a vast portfolio that can cater for a complete range of products and essentials is rare – but they do exist! Do your homework to find out if they supply products relevant to your business and continue to innovate to add real value for you. And of course, do your due diligence on making sure the time you are saving isn’t lost on high pricing – it needs to work for you.

 

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