Buy right, gain more
Kirjoittanut: Ariel Cohen - tiimistä SYNTRE.
l read the book “buy right & gain more” by Matti S. Rauhala. The book was written in Finnish, but the essay will be in English. I’m trying my best to translate everything clearly for you to read. This is also my first time writing a proper essay in English so let’s see how it goes!
I’ve always been interested in how different businesses work and how they are managing and using different techniques to maximize profits by using money smartly, for example investing in logistics, sales & buys. This book is trying to focus mainly on how to buy right and how does it impact positively the company or new entrepreneur. I will focus now mainly on logistics and finding a good supplier.
Buying right is something that you don’t hear often when talking about different businesses. Seems like everyone is focusing on big numbers in the sales chart and praising good salesman/women, forgetting the people behind those great fellas that are providing the items/services they are selling.
The major importance of logistics.
Logistics creates an environment that promotes better business results.
Well-organized logistics translates for example to increased efficiencies, lower costs, higher production rates, better inventory control, smarter use of warehouse space, increased customer and supplier satisfaction, and an improved customer experience.
In Finland, the costs of logistics are high compared to other Nordic countries. l did some research and in 2019 Finnish companies were using about 13,5 % of their total turnover into logistics and that tells that there is room for improving the process. I believe that with careful planning we can minimize the costs used into it rather simply.
The turnover used in logistics has been rising especially in smaller companies where the size of the warehouse is often too large and there is too much money tied into that. By buying right we can control the flow of items in our warehouses and by that saving money in the whole process of logistics.
Trying to save on logistics fees doesn’t mean that you should order a lot of items in the same order just for them to sit in your warehouse with no certainty that they will be sold anytime soon.
Finding the right suppliers
Finding the right and trusted suppliers for your company is crucial, it is like a long-time relationship where you need to understand each other’s needs well, experiment with new things together, and be genuine. Partnership is necessary for every successful company, and it means working together towards a common goal and interest.
If your supplier isn’t reliable or doesn’t provide high-quality products, your company will struggle to deliver well-priced goods and services that meet your customers’ expectations. There is a lot of different things to look at while choosing a supplier, but l will try to narrow the list to the most important ones in my opinion.
Different suppliers with different prices, how do l choose the right one? For maximizing profit, you should go for the lowest price, right? The answer is no.
1. To achieve a long-time relationship, l need to be sure that the supplier is financially a stable company and that it will provide services for me in the future. Since the information is public it’s you can use key figures to analyze the supplier’s solvency, liquidity and check their income statement. The downside of it is that the information is from the past and will not guarantee anything for the future, but it’s still valuable information and must be taken into consideration.
2. Like l said earlier, the lowest price is not always the best value for your money. When I’m choosing the right supplier l also want good service, reliability, quality, sustainability, and proof that the supplier is ethical. My business values don’t match with selling products that for example are made using child labor.
Long story short. When you plan carefully what and how to buy it will most likely increase the profitability of the company. By buying right we are maximizing the sales margin and making other expenses like logistics lower.
“The hardest thing in making good deals is staying away from the bad deals”