What is Purchasing activity?
Purchasing is the acquisition of products and services on behalf of the buying entity. Purchasing activities are needed to ensure that needed items are obtained in a timely manner and at a reasonable cost.
Entrepreneurship needs investment. Once you have it, you have to use the money on numerous different things. Here are 4 ways you can improve your purchasing capacity as an entrepreneur.
- Dictate your terms and be firm.
Whenever you are buying something, let’s say for your office, if certain attributes of the sale are objectionable to you, don’t purchase. If any areas of the sale are unclear, get clarification. If any areas of the contract are objectionable to you don’t sign or strike out that section and have the sales rep initial the change along with you. If an addendum is needed to have a written record of things not in the contract then add one. Just because the seller says something is standard, or that the contract is preprinted, or tells you that is how the company operates, so what? You are the customer, you dictate terms. You must understand the positioning in this relationship. Nothing happens until you say so. The key part of that sentence is until “you say so”.
- Develop a report of your purchasing behaviour yearly.
You must be sure that your purchasing patterns are the most effective ones for your buying habits. You should be looking at quality, prices, and delivery. The goal is to get the best of all three. Find out if your purchases are being delivered on time. Is the quality of the items acceptable? Are you buying in the right quantities based on your annual usage? The right quantities are the quantities that yield the lowest price per unit. In other words, are you buying an item every 3 months when instead you could be ordering it every 6 months and realize a 15% to 25% savings based on the higher volume? Ask the questions.
- Authorise a single source or department to carry out purchases for your firm.
If you give permission anyone who needs anything to purchase whatever they need, even if it is small quantities of office supplies, failure in funds management is waiting for you. All purchases must be authorized and funneled through one central purchasing group or individual. This is the only way you will be able to control the process and this is the only way you will be able to maximize your purchasing power.
- Don’t get scammed.
These are the types of scams that cost businesses millions of dollars each year. The calling party will offer overpriced, poor quality products. The sales pressure is very high and can range from pushy and aggressive to very friendly and sneaky. These people could sell a mongoose to a snake. I think many of them must be retired politicians. Before you know it, one of your people has given approval for a product that you do not need or want. Tens of millions of dollars are lost in this manner each year. Think of this as a predator and prey relationship. Guess which one you are.
Your best defense? Hang up. If anything sounds fishy it probably is. They will offer close-out specials, deals on over buys, canceled orders they are liquidating, and any one of a hundred other scams to make their offers not only sound legit, but like a very good deal. Demand that any and all offers be submitted to you in writing. Since you do not allow any order to be placed over the phone, and since you require purchase orders to be written and cross checked before any bill is paid, you should be safe from these types of scams. You are utilising these types of procedures, aren’t you? Even if you needed, or normally bought, such items you can be very sure the price of these is much too high and the quality is sub-par at best. Often they will also offer a free gift just for the party approving the order and will even send it to their home just so it is between your employee and the scam company.