Do you need to gain more time? Here’s how.
So many companies lose money using many different suppliers and creating several suppliers orders each month. It’s important to have different reliable suppliers in the supply chain, however the cost of administration processes is usually between £20-£60 per order depending on the process and accuracy that’s eating into usable time. This lost time is costly and is often overlooked. So, let’s consider a basic example process here.
- Sourcing an item(s) - 30 minutes.
- Typing and raising a purchase order - 15 minutes.
- Handling order confirmation – 5 minutes (Chasing this will take longer)
- Receiving & checking goods in – 15 minutes
- Re-stocking stores or areas – 15 minutes
- Completing & checking the purchase order – 5 minutes (considering pricing and quantity is accurate)
- Receiving each invoice and checking accuracy, then posting onto the system - 5 minutes (Consider no errors)
- Receiving a statement to check against invoices – 5 minutes for each supplier.
- Making a monthly payment – 5 minutes for each supplier.
Total – 1h 40 minutes per order – labour cost at £12.00 per hour – total labour cost £20.00 per order per supplier. Making 50 orders per month is 83.3 hours per month - £1,000 labour per month.
More sustainable ways.
- Email requirement sent to a supplier who can handle most of your needs – 10 minutes.
- Receive information & price to review – 5 minutes.
- Handling order confirmation – 5 minutes
- (Monthly order numbers already raised for all orders from each supplier) – 5 minutes per month per supplier. (Supplier invoice amalgamation system)
- Ideally carry out fortnightly or monthly stock checks and cover any unusual requirements with supplier present– 20 minutes.
- Receiving & checking goods in – 25 minutes because of larger orders (Goods in checking available)
- Re-stocking stores or areas – 25 minutes because of larger orders (Goods replenishment available and/or vending)
- Completing & checking the purchase order – 10 minutes (considering pricing and quantity is accurate)
- Receiving one monthly invoice per supplier and checking accuracy, then posting onto the system - 5 minutes (Consider no errors)
- Receiving a statement to check against one unpaid invoice – 5 minutes for each supplier.
- Making a monthly payment – 5 minutes for each supplier.
Total – 2hrs per order – labour cost at £12.00 per hour – total labour cost £24.00 per order per supplier. Number of orders per month now reduced to 15– so only 30 hours per month needed - £360 labour cost per month minus less suppliers to pay.
Note: if stock received and replenished is included, the total will be 1hrs 10 minutes per order – labour cost at £12.00 per hour – total labour cost £16.00 per order per supplier. Reduce to 15 orders per month is now 20 hours per month - £240 labour per month.
What more productive work can be done with an extra 50-60hrs per month based on these calculations alone?
The challenge is finding suppliers who can reliably do this with the flexibility that goes with it to receive an amalgamation of different items in one order. Even if a few of the item prices are marginally higher, the overall saving can be big, especially when clear pricing and accurate invoicing is supplied. In most cases it really does not mean stock holdings need to be increased, in several cases it can be reduced.
Adding a sustainable plan into purchasing processing and partnering with suppliers to achieve continuity, gain usable precuring time and achieve an overall cost saving and is worth its weight in gold.
The team at Central Fasteners have many years of experience in managing customers stock and sourcing even the most unusual items. We are more than just a distributor of engineering, safety, workwear, hygiene products, tools, equipment and paints because we offer services beyond normality with access to millions of goods.
If you wish, we can discuss this further with me on 01889 270163 ext 202 or email [email protected]
Making the most of each hour from each day!