Single Point Purchasing As contractors grow, it often becomes the standard operating procedure to issue credit cards, or make company accounts accessible to a number of key field employees. While this practice may be a necessary evil to avoid costly delays in emergencies, it ought to be well understood that emergencies are the ONLY time this practice is allowed. There are several reasons why single point purchasing (the practice of having one purchasing agent for your company) is optimal for cost control and savings. The first is the value of establishing supplier relationships.
It is a secret of the construction supply industry that every item has multiple, and often significantly varying, price points. Someone walking in off of the street will pay the most. A contractor who regularly does business with the supplier will pay less. Your employee who has established a relationship with your supplier’s sales representative can negotiate an even greater discount. All too often, this is used to the field employee’s benefit on materials for side jobs or home projects. In essence, the employee is using the bargaining power of your purchasing to their own benefit, and you are losing out. The more you buy from a supplier, the more valuable the relationship becomes for their business.
That is why it is important to have a familiar face representing your company with the suppliers. Don’t be afraid to use that relationship to negotiate prices. If you have found a product somewhere else at a more competitive price, let them know about it and give them an opportunity to match it. If you have a tight, hard dollar bid coming up where every penny may mean the difference on you landing the project, let them know about it in advance, and see if they can help you out. Odds are, if you’ve established a single point of contact for your company, they will try to work with you.
Even if most of your materials and supplies are purchased at major box store retailers, nearly all of them have customer loyalty programs that often include rebates and/or cash back incentives that your employees may be using for themselves instead of benefiting the bottom line of the business. All of these things are important to think about in an industry where a 3-5% in your bottom line might make the difference between a profit or a loss on a single project, or an entire year.
