Effective Purchasing For Small Businesses, Part 3 of 5

Purcahsing for small businessesConducting a Bid

In this blog post, we continue our discussion of how small businesses can use purchasing for their strategic advantage. In the first post, we discussed why purchasing is strategically important. The second post covered how the process begins with a thorough, written specification of the products/services you need and a request for bids from multiple vendors.

Requesting and Comparing Quotes

Since your specification details your purchase needs down to delivery and payment terms, you might expect the vendors you’ve selected to provide identical quotes that you can compare “apples-to-apples” in order to select the one that’s best for your business. However, there can be variation in how vendors respond. Some might quote products that don’t entirely meet your specs, or others might quote delivery or payment terms different from those you requested. You have to do the work to compare. Also, you might have to track down quotes made by phone, fax or email in order to do the side-by-side comparison. You can spend a lot of time in the comparison process.

To complicate matters, you might not always choose cost as your selection criteria. In the water heater example from the first blog in this series, perhaps all vendors have come in within your target price range, but one offers to deliver a week earlier for a small price premium. If speed is essential, this vendor’s overall quote might be the best. If the vendor quotes don’t follow the same format and you are interested in more than just the bottom-line price, it can be hard to compare all the details of the deal and focus on the aspects most important to you.

Delivery and Payment

You should have standard processes in place for inspecting and accepting the delivered items, accounting for the purchase, and paying the vendor. You need a system that keeps track of all purchase history including the products/services purchased, terms, supplier, and payments. Most small businesses keep different types of purchase information in different locations. For example, payments might be tracked in your accounting system, while supplier information might be stored in a paper file.

Keeping the purchase history information is an important first step toward managing your supplier relationships, a topic covered in our next post in this series.

2 Responses to Effective Purchasing For Small Businesses, Part 3 of 5

  1. Pingback: Effective Purchasing For Small Businesses, Part 4 of 5 « Buyful Blog

  2. Pingback: Effective Purchasing for Small Business, Blog 5 of 5 « Buyful Blog

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