The world harbors millions of businesses operating in different parts of the globe. These businesses vary in the type of industries they classify themselves under. The variation is evident in their operations as well. However, two things are common to all businesses despite the differences. One: they are all involved in the purchasing and selling of goods or services. Two: competition is expected if at all it is not already present! Well, as anyone would guess, all these factors apply to mercantile businesses.
Achieving success in mercantile purchases requires a strategic approach. To remain competitive in this business line, you need to be very keen about your purchase process and the various steps involved. On that note, let us take a look at the steps you need to integrate into your mercantile purchase process to remain competitive.
1. Identify the Need
As an entrepreneur, you need to know that purchases are made when there is a need. The need could be immediate, foreseen, expected, or implied. Even if it is stock that you want to replenish, you need to have a plan. Needs, in this case, may range from buying a machine to upgrade an outdated piece or replace a broken one to improving an existing product, fulfilling an order, replenishing your stock, and a whole bunch of other scenarios. In most cases, the need is seen as a problem, and the suppliers/distributors/ retailers are supposed to provide a solution.
2. Description of the Product to Be Bought
After identifying the need, you need to be specific about the product or service you intend to acquire for resale. The description of the product depends mainly on the issues at hand and the purpose it ought to serve once bought. This process often involves a third party having a clear picture of whatever you are about to acquire. If you are in the real estate industry, you will benefit a lot from working with a reputed real estate agency. A renowned agent dealing with commercial property for sale will come in handy if you specialize in buying and selling land or property for offices, warehouses, residential units, or retail stores. They will help you locate the kind of stuff you are looking for, alongside essential details such as the size, location, and price it is going for. The same case applies to other types of goods and services in the mercantile business. This helps ensure that you are making the right investment decision.
3. Drafting the Specifications
If the purchase is major or the product is strategic, the best way out is to call for tenders. This is where you will need to draft the specifications of whatever product you are looking for. This will also question your usual suppliers on their offers and business practices, leading to quality products with better deals in the future. While making your bid for a tender, it is good to have the terms and conditions and needs in place to ensure you are getting what you exactly need. Keep in mind that the more precise and informative you make your specification draft, the smoother the purchase process will be.
4. Supplier Sourcing
You don’t just pick a supplier out of the blues and make a purchase. You need to gather information about the available suppliers in the market and create an exhaustive list of all available options. Go as far as checking their catalogs, websites, and any other information you can get your hands on. Identify a few potential suppliers and send RFI’s (Request for Information) to get extra information to gauge their credibility. To minimize financial risks, conduct supplier audits. This will also ensure their reliability and logistical capabilities.
5. In-Depth Analysis of Applications
This is where the elimination process will kick in. The general performance of each supplier company will be taken into account together with other considerations such as pricing, terms and conditions of payments, ease of maintenance, product quality, and after-sales service, among other factors. Pre-existing relationships and supplier reputation should be considered as well. After carefully evaluating your suppliers, you can go ahead and choose the most preferred supplier. They should have the capacity to handle at least 80 percent of the supplies you might need. For mitigation purposes, be sure to have a second option handling 20 percent of your supplies.
6.The Negotiation Step
No purchase should ever be made without a prior agreement on the terms that will help close a purchase deal. Come up with a product price that you both agree on and a mutually agreed payment plan. The delivery times and after-sale services should be clear before the purchase is made and the deal is closed. Ensure a contract is signed, ensuring that it includes the quantity, price, deadlines, and compensations.
Purchases are a big deal to any mercantile business. This is because you are purchasing goods or outsourcing services, intending to resell them. The wrong move could easily lead to unforeseen losses or inconveniences that end up crippling the business. Thankfully, the above steps can help you avoid such pitfalls if followed carefully.