From the course: Cost Reduction Tips - How To Cut Costs And Maximize Profits

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Central purchasing department analysis

Central purchasing department analysis

From the course: Cost Reduction Tips - How To Cut Costs And Maximize Profits

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Central purchasing department analysis

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- The next way that is well worth investigating for saving money, is to be better at purchasing. If you can save money on your purchasing, that's straight on the bottom line. So if you're spending 90 and you're selling it for 100, you're making 10, if you can get that 90 down to 80, by just buying stuff cheaper, that's instant profit, you've doubled your profit. And it's quite possible that if it's costing you 90, you'll probably find that about 40 or 50 is labor, and the other 40 or 50 is stuff that you buy in, so to be better at purchasing is really key in an organization, and I've got a bit of an obsession about centralized purchasing, in that I don't like centralized purchasing. And I want to tell you why that is, cause in theory it would be a good idea, wouldn't it, to have specialist purchasing people, to bulk it all together, to have economies of scale, but let me tell you why I think it's worth being suspicious about centralized buying departments. The first thing is, they…

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