If you need to improve your margins, then look to your purchasing

Over the first 18 months of the exercise the company saved more than £400,000, some 5% of turnover. The inspiration for the project was the ViP best practice study on purchasing. His enthusiasm sent me back to the report to pick out a few key issues.

Purchasing is a professional task just as any other and needs to be tackled systematically. Yet too often when the ViP team reviews operational performance at packaging companies, it is left as a side issue by senior management.

Often no one person has overall responsibility for all purchasing. There is no overall record of what is being spent on what. While main materials and consumables may be reviewed, there is often little control of secondary purchases, such as phones and office supplies, and in practice people are ‘ordering’ not purchasing.

Sometimes staff rely on friendships built over years or at the other extreme select purely on price rather than ensuring best value in terms of both price and performance. Clear decisions need to be made on whether to tender or spot purchase and, as always, clear measures and realistic targets reviewed on a sustained basis will achieve a great deal.

Let me finish with a quote from John Bewick, then chair of the purchasing report steering group, who says that in print and packaging, for every pound you sell to your customers, often around half goes to your suppliers. These, he says, are not necessarily trade suppliers; they include couriers, haulage, waste disposal, fleet, utilities, council, lawyers, auditors, IT hardware/software and so on.

Make them fight as hard for your business as you have to. Put the effort in and it will repay you. While this may seem onerous and require specialist skills, it is neither; most of it is common sense and simply needs commitment and organisation.

Richard Gray is commercial director of the BPIF and a director of Vision in Print. Contact him on richard.gray@visioninprint.com.

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