#1. Periodically solicit new price quotes from other vendors. In competitive times, you often can find other suppliers who will give you better service, lower prices, higher quality, or all three. That’s particularly true for items such as printing, delivery services, office supplies, etc. But be reasonable; soliciting bids on every item can be time consuming. Concentrate your efforts on frequently ordered or big-dollar items.
#2. Avoid inventory overbuying. Excess inventory not only ties up your cash but the holding charges (warehouse space, insurance, spoilage, theft, etc.) can easily add up to 20% of the value of the goods.
#3. If the price and quality are comparable, consider purchasing goods and supplies from the fastest supplier or the supplier who is willing to store or warehouse the product for you. That helps reduce on-hand inventory.
#4. Don’t use too many different suppliers for a single item. If you order infrequently, they may not extend credit and the average price per unit may be higher. A supplier who knows he’s getting all or most of your business on a particular product also may be willing to give you a better price and better payment terms.
Relevant Resource:
Resource Report #01: Solving Cash Flow Problems: 50 Strategies That Increase Cash Flow Today with a Case Study on Increasing Sales and Profits.