Cost of Goods Sold
Part 1 of a 2 part series
- Decreased gross margin.
- Increased cost of goods sold.
- Significant adverse deviations from budget.
- Significant increase in a particular line item’s cost.
Steps to Improve: BUY RIGHT & SAVE
- Buying right is better than a sales increase; negotiate special discount deals.
- Comparison shop supply prices.
- Get competitive bids.
- Shop around: bulk purchase discounts; annual totals.
- Be ready to change suppliers, brands; loyalty is a two-way street.
- Negotiate well: payment terms; storage; price; shipment.
- Buy in volume for discounts.
- Take advantage of purchase discounts.
- Take advantage of prompt payment discounts.
- Track lost purchase discounts.
- Opportunity buy and buy when unusually good deals are available.
- Scale back orders but pounce on deals.
- Buy from or near prime source; cut out middlemen.
- Buy directly from manufacturers.
- Find unusual sources: use scrap/remnants; new ways to do things.
- Insist on timely delivery.
- Insist on good quality products.
- Periodically review available alternatives for major expense items.
- Rate key suppliers on cost, quality and delivery and let them know.