Businesses that source their products will often seek to minimise this expense. Cutting down on product sourcing can help in boosting profit margins and allow them to lower the sales price. Lowering sales prices can be beneficial as it allows the business to be more competitive in markets where many others are offering the same kind of product.If you are looking for a product sourcing agency in Thailand and reduced costs, then here are a few ways businesses can accomplish this goal.
1.Review Payment Terms
Take time to go over the contracts you have already entered into with suppliers. Take a look at the existing payment terms and see if there is room to negotiate for better pricing. This could be achieved by changing purchasing patterns so you have more bulk orders delivered or pay earlier on invoicing.
It can help to conduct some market research before such engagements so you have facts and figures at hand that justify you getting a better deal. This can include such info as changes in raw material pricing, shipping costs, forex, and more.
You may find that certain products are cheaper to source from overseas rather than relying on a local manufacturer. Many businesses have adopted outsourcing as a good way to cut down costs related to manufacturing, customer care, administrative work and much more. The biggest cost savings tend to come from labour, rent, energy, and infrastructure investments.
The impact may vary depending on the nature of your business, but it does pay to shop around. Do not just look at the cost of production, but also what it will take to deliver the products to your doorstep. Shop around different destinations and ensure the quality of the product matches up to your existing standards.
This is especially important for larger organisations that may have devolved functions. Leaving the responsibility of purchasing work to a single department reduces the risk of duplication and maverick spending. Maverick spending refers to purchases made outside the normal procurement processes that are protected by negotiated contracts with suppliers.
Not only can you better secure discounts that come from such negotiations, but you can also often rely on a small team that is centrally located, rather than widespread across the organisation. There will be better accountability and easier training facilitated.
4.Re-Evaluate Stock Levels
Before placing an order from a supplier, you need to check on the inventory you already hold. Make note of the fast-moving products, and those that are essentially dead stock. Figure out a plan on how to clear out dead stock so you have ample room in storage for incoming orders.
Be sure to prioritise your orders so that fast-moving goods are bought in larger quantities. This will mean less need to later discount them for sale as they will go out the door faster. The idea is to refocus your product offering on what will maximise profitability for your business. The faster these goods are shipped out to customers, the less cost you will suffer not just due to dead stock, but also losses related to prolonged storage.
Much savings can be achieved by adopting new technologies. Inventory and procurement systems can help to more easily keep track of stock levels, ensuring you place orders on time without having to waste or require more storage space. Accounting systems help to monitor sales figures so you know which products are fast-moving and keep up with payment agreements that would qualify you for discount deals.
Resource management systems can also aid in establishing the level of waste the business is suffering so you know if and when you need solutions that will limit this resource drain. Using technology makes work easier and faster.