Cutting administration costs in your business
If you are looking to make savings across the business, an area of opportunity could be to review the costs associated with supplier management.
CIPS (Chartered Institute of Procurement and Supply) have calculated the average costs of placing a Purchase Order is £50 per time. This takes into account the management of orders, invoices, utility and labour costs – if you walk through the process at your operation you may identify a higher (or lower) cost. * How many people are handling each order or invoice?
Multiple purchase orders also accumulate increased handling in the warehouse. Goods arrive in several batches on different supplier vehicles – this generates multiple documentation to allow you to put the delivered goods away into racking.
If you are dealing with many different packaging suppliers and raising weekly or monthly purchase orders with each of them, it is definitely worth investigating how much it’s costing you.
Savings could be made by consolidating your supplier base or, switching to a single supplier who can deliver all of your packaging requirements.
By raising a single blanket PO each month your administration is already reduced. Tie this in with monthly consolidated invoicing (one invoice for a full month of deliveries) and reduced delivery vehicles into the warehouse, then handling of both paperwork and goods is much reduced.
Consolidated invoicing can also help with your cash flow. Any orders placed in the first week of the month will be eligible for payment from date of invoice – so if you are invoiced end of month it will typically add an additional 3 weeks to your 30 days from date of invoice payment terms.
Tracking orders, managing forecasting, reporting and identifying packaging waste also becomes easier – all of your data is potentially generated from a single source.
Consolidating suppliers or switching to a “one-stop shop” supplier could positively impact your business costs. Why not take a look today to see what potential there is in your business to reduce costs.
Contact Macfarlane Packaging to see how we can help: www.macfarlanepackaging.com
References
* Purchasing & Supply Management Frequently asked questions and answers: https://www.cips.org/Documents/Knowledge/Tools-templates-models/Tools/CIPSResourcesFAQsV2.pdf
