- August 29, 2019
- Posted by: SosAdmin)
- Category:
Background: This client was engaged in the business of manufacturing solar water heaters and other renewable energy products. Despite good sales numbers, our client was not making profits. We were called in to help them to increase their profits.
What We Did: As part of our profitability increase exercise, we looked at purchase pattern of the main products which constituted at least 25% of total purchase value
Results: One of the major items which our client bought was batteries. Most of the times, it was bought on ad-hoc and from different suppliers. We then questioned the purchasing department, and they had no clue. Then we suggested buying from few providers and with better planning. In next one-year company saved close to INR 2.4 Million and a result of this our client will save massive amount of money in future years
What We Can Learn From This: Identify all the purchase transactions, where sporadic purchases
take place, evaluate whether such purchases can be planned. If yes, then identify the right supplier and negotiate a price which can be valid for three months, six months or year.
