ACCOUNTING

Controlling Supply Costs

Purchasing approach that guarantees buying supplies at rock-bottom prices.
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As the owner of an independent computer manufacturer, $14-million BBC Computers, based in Merrimack, N.H., Bill Blocher knows that purchasing decisions matter. "The computer industry is very price sensitive and also time sensitive, since the technology keeps changing and prices often go down with time." To cope, Blocher has evolved a purchasing approach that guarantees his company buys supplies at rock-bottom prices:

Survey the marketplace. "We never make a purchasing decision without calling at least three of our regular sources," says Blocher. BBC doesn't hesitate to haggle. "If one wholesaler quotes us a low price, we'll tell others who it is and how much and try to get an even better deal."

Keep inventory lean. "We try to avoid stocking any supplies at all -- why tie up our cash in inventory?" As a rule of thumb, BBC will order ahead only on parts with shipment times longer than a couple of weeks. "Then we will order only as much as we'll use during the shipment cycle."

Negotiate terms as well as prices. "If one supplier quotes us a slightly higher price, but at net 60 days instead of net 30, we'll do a complete cost analysis to figure out which way we're better off, making certain we factor in our costs of money," Blocher explains. "I try never to lose sight of the fact that the way we make every purchase every day will make or break us." -- Jill Andresky Fraser

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What kind of financial problems do growing companies face when they enter international markets? And who can help them solve those problems? See [Article link] for the results of our international survey and some tips on how to purchase international insurance.

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Last updated: Mar 1, 1993




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