Keep in mind that more than half of a company’s invoices are fixed costs, according to the Spanish Association of Purchasing, Contracting and Utilities Professionals (Aerce). And in addition, every euro saved flows directly into your profit and loss account as a benefit. Keep in mind that 67.2% of a company’s revenue is invested in purchases, and according to Aerce, if acquisition costs are reduced by just 1%, pre-tax profit automatically improves by 9%.

Where to start saving?

1. Long-term renegotiations

It’s not about constantly negotiating. Normally you have to make an effort first of all, so that you don’t have to do it all the time. Companies can offer you better terms if you sign a long-term contract. This means that in this period that percentage of their production has already been sold. You don’t have to make an effort. With what they are willing to adjust margins. In this way, a supplier is willing to offer better conditions in the long term. What needs to be set up are automatic price verification systems when certain conditions are met: market prices… This needs to be done beforehand.

What you cannot do is trade constantly. But watch the market price constantly. It is important that a supplier does not think that they are fixed in your company. And let him know I know how the market moves. If he thinks we’re a loyal customer, he’ll always raise our prices. If the contracts are strong and ongoing, it may be worth continuing to negotiate. Otherwise, the added value for the supplier is less than the effort. With insurance policies and telecom operators, you will find more than one surprise.

Often it is about monitoring and checking the conditions that apply to us. One expert told us that just by checking compliance with the banks in a company with multiple loans, what is saved per year from errors can cover the salary of three employees.

2. Centralize all your purchases

Volume is an added value. It’s not the same as contracting your entire network for every branch to have a provider. You can trade better – with a higher volume account. Likewise, it is costly for each department of your company to take care of the purchases that correspond to each area. Decisions are not objective. Technical areas don’t like to evaluate offers without seeing prices. On many occasions the price determines the technical evaluation. If the technical areas are technically worth it without the price tag, they’ll fret, but they better appreciate it. What you need to do is centralize the decision in a purchasing manager and weight it. Purchasing takes into account the terms of payment, conditions and costs.

3. Let your potential suppliers know you need a service

One of the most effective savings formulas is to change suppliers. But it’s not about change for the sake of change. Nor that the ideal provider finds you and your needs. Maybe you already have it, but you need to set prices or reconsider the relationship (improve price, change contract terms, delete services you no longer need, use other services from the same provider). Before a contract with a customer expires, let your competition know you need a service. What is essential here is the establishment of clear and precise technical regulations. If we go out without describing exactly what we want to buy, the supplier leads to telling you what he thinks you want. And most likely that’s not exactly what you need. And he doesn’t because you didn’t explain it well.

how to solve it Tell your suppliers what evaluation criteria the offers have. It’s a trick used by multinationals and public companies (by law), but not SMEs. You tell the market what your priorities are. When you say that the economic bid is 70% of my decision, you’re saying you want a price. If you say it’s 30-40% – then you need quality.

4. Eliminate your “third class” vendors

Experts also recommend regrouping your suppliers. Maybe you’re handling a catalog of 50 references from one category of data, but then you analyze it and see that you don’t need 50 references, that with 20 you might be fine. It’s possible that one day, for reasons of opportunity, for price reasons, you’ll buy BRAND A, then buy BRAND B because it’s cheaper, and then buy BRAND C’s products because it’s even cheaper. This can be short-term but ruinous in the medium-term because you have more references, more invoices and you have to buy a lot… but of different things.

Initial planning must be done with a single supplier that you can negotiate and quote on a volume basis, and you will eliminate references in your cost catalog. You were probably able to choose the supplier even better, since it is always easier to optimize the price with a single supplier. In other cases, it’s as easy to check if the same maintenance provider can also be the security provider.

company management