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:
- Placing more business with fewer suppliers can elevate you to valued customer status, enabling you to make the most of your own buying power.
- 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).
- 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
- 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.
- 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!)
- 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.
- 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!