Effective Purchasing for Small Business, Blog 5 of 5

The Buyful Revolution

The previous posts in this series show how a strategic purchasing process can benefit your small business in many fundamental ways. When you use Buyful to optimize your purchases, you can also save a more valuable commodity: your time. Buyful is designed to revolutionize the way small businesses purchase—delivering all of the benefits of best practice purchasing for very little investment in time and at no cost to buyers.

Specifying the Items You Want to Purchase

The second post in this series outlined the benefits of starting the purchase process with a thorough, written specification of the products/services you need. When you create your items specifications with Buyful the process is easy and fast. You can use predesigned templates to insure that your specification is complete, re-use specifications that you’ve previously created, or start from specifications created by other businesses like yours in the Buyful community. In all cases, the standard specification format insures that your needs are clear and complete.

Choosing Suppliers

The second post also described how expanding your vendor base can be worth the effort. You just need a better way to both find and evaluate vendors. With Buyful, your vendor search starts from your specification; you get a list of vendors who sell the specific items you need. You can filter the list to show only your current suppliers, suppliers recommended by people you know, suppliers in your region, or all suppliers. When considering new suppliers, you can read reviews from businesses you know who have purchased from a supplier. These trusted referrals can greatly reduce the risk involved in working with someone new. We describe reviews in more detail below.

Requesting and Comparing Quotes

Our third post covered the problems associated with comparing bids from different vendors. Even when your specification is clear, vendors might respond with different products or in different formats, making it hard to do an “apples-to-apples” comparison. Buyful gives you an easier way by requiring that suppliers respond in a unified format based on your needs.

When you request quotes online with Buyful, you are assured “apples-to-apples” responses. All of the quotes follow the same standard format. Any changes from your specified terms are highlighted. There are no faxes or emails to track down. All of you quotes are available to you on your Buyful “home” page. By following the specification-multiple vendor-quote process, you can insure that each purchase delivers the best value to your business.

Buyful helps you track the items through the receiving and payment process—with all payments conveniently online.

Delivery and Payment

Buyful also gives you the convenience of having all of your purchase history in one location. You’ll always know who you purchased from and what you purchased and when. You can track payments, and, if you prefer to pay online, you can pay all suppliers and store your payment information in one, highly secure site.

Rating and Reviewing your Suppliers

The fourth post in this series described the benefit of keeping a vendor “report card” documenting how well the vendor performed and whether you recommend using that vendor again. Buyful also makes this process effortless.

Each online transaction concludes with the opportunity for each partner—buyer and suppler—to provide a descriptive review of the other partner and a rating of the transaction process. After each subsequent transaction between these partners, there’s an opportunity to revise the review and rate the new transaction. In this way, Buyful tracks both overall impressions (reviews) and transaction performance (ratings) over time. In addition, the system provides additional subjective ratings based on factors such as making timely payments and keeping commitments. You can balance these subjective system ratings against the more subjective partner ratings to get an accurate overall assessment of a potential supplier.

When you use Buyful to search for new suppliers, you can see all ratings and reviews from other Buyful members to whom you are connected. Because reviews are from trusted business partners, you can consider them trusted referrals to new suppliers.

When you buy, Buyful reviews reduce the risk of working with new vendors. When you supply, positive reviews can deliver new business.

Join the Revolution, Join Buyful Today

Buyful offers optimized purchasing free to buyers. Suppliers pay only a small transaction fee on completed purchases. Sign up today to get the strategic benefits of optimized purchasing for your small business.

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Effective Purchasing For Small Businesses, Part 4 of 5

After a Purchase

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. In the third post, we covered requesting and comparing bids and managing delivery, payment, and your purchase history. In this post we cover what you need to think about after the actual purchase transaction.

Ranking and Reviewing your Suppliers

Relationships with your suppliers are crucial. Long-term relationships can lead to lower prices, as your supplier factors your relationship into their price quotes. Likewise, knowing your supplier will deliver crucial components on time and in good condition can reduce some of your business worries. At the end of a transaction, you can keep a vendor “report card” documenting how well the vendor performed and whether you recommend using that vendor again. The next time you request and receive a bid from the supplier you can factor the supplier’s “grade” into your purchase decision. Knowing that you are purchasing from reliable suppliers lets you focus on other aspects of your business.

Strategic Purchasing: Benefits Beyond Cost Cutting

When you adopt a strategic purchasing project you benefit your small business in more ways that just cutting expenses and freeing up precious cash to use for growth. Lower supply costs mean you can compete on price, when necessary, to win business. Closer relationships with suppliers can lead to better prices, favorable terms, and referrals to new customers. It’s clear that managing purchasing is crucial, but how do you find the time as a small business owner when your number 1 job is to focus on serving customers and increasing sales? In our final blog in this series, we’ll show you how to do this.

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.

Effective Purchasing for Small Business, Part 2 of 5

Starting the Process: Specifications and Supplier Selection

business owner graphicIn 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. In this post, we get the process started with item specifications and supplier selection.

Specifying the Items You Want to Purchase

Before purchasing any item, you typically have in your mind a specification describing the item and your terms. For best-practices purchasing, you need to write a detailed product specification for each purchase. A specification should include all of your functional requirements and also your purchasing terms such as delivery method and time, warranty and service requirements, and payment terms.

For example, imagine you need to purchase 30 water heaters for the first phase of a condominium development. Your specification does not need to include the brand, but should include the capacity, your target price range per unit, the number of units, warranty requirements, and your delivery and payment terms. You can re-use this specification on the subsequent phases of the project or for other similar projects.

Writing specifications does not have to be a lot of work if you can easily save and re-use specifications for items you purchase frequently or share and learn from other businesses.

Choosing Suppliers

In order to reap the benefits of competitive bidding, you’ll need to have several potential vendors respond with quotes for your exact specification. Best practices dictate that you should get multiple quotes for any purchase over a few hundred dollars—set a reasonable standard for your business and stick to it. Get at least three competitive bids.

Do you know which one of your current suppliers sells this item? You might have to search through a record of past bids or transactions, or call several suppliers before you find the ones who can bid.

Can you find new suppliers to bid? Because it can be time-consuming to search the standard print and online directories to find new suppliers, many small businesses naturally fall into the trap of repeatedly purchasing from the same known and trusted vendors, without bothering with competitive bids. It can be hard to find trustworthy new vendors and risky to try new vendors on critical projects.

Expanding your vendor base can be worth the effort. Your best bet is to turn to your business network for referrals to suppliers who are recommended by someone you know. In the next blog in this series, we cover how to request and compare quotes.

Effective Purchasing for Small Businesses

Purchasing Image

Part 1 of 5

Why Purchasing Matters

When it comes to strategy, small business owners are normally intensely focused on customers: keeping current customers and winning new ones. A customer-focused strategy makes sense. After all, it’s customers that fuel growth and grow revenue.

In their focus on customers, however, many small businesses fail to see how strategically managing their purchasing is just as important to the bottom line. For most businesses, purchasing of goods and services represents up to 50% of total expenses. A systematic approach to purchasing can typically save 5% to 30%. These savings directly increase profit or free up cash to spend on growth initiatives.

Purchasing can also help with acquiring new customers. Keeping costs down allows you to be more competitive in selling—particularly when your customers are comparing bids from multiple vendors. When you spend the time to develop a positive relationship with your suppliers, they are much more likely to refer you when their other customers need the products or services that you supply.

Also, effective purchasing is not always about price. Sometimes timing of delivery, quality, service, or support is just as or more important than cost. A good purchasing process is really about finding the best overall deal for the products you need.

While small businesses can’t afford the time or cost required to manage a purchasing staff typical of a larger business, they can benefit from adopting purchasing best practices. In a series of blog posts, we will highlight how you can adopt best-practices in purchasing and how we are designing Buyful to revolutionize your purchasing process and make it simple, effective, and efficient.

We’ll cover:

  • Starting the Process: Specifications and Supplier Selection
  • Conducting a Bid
  • After a Purchase
  • The Buyful Revolution
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