Announcement

Collapse
No announcement yet.

Bulk Purchase versus Small Frequent Purchase

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • #16
    Re: Bulk Purchase versus Small Frequent Purchase

    It would ultimately depend on the items you intend to purchase and how frequently you use them. Buying in bulk would be a great idea if you intend to purchase something that you use on a frequent basis, say office or cleaning supplies. However, items that easily expire or are not used often should not be bought in bulk. For instance, ink cartridges dry up if they remain in the stockpile for too long. You just need to buy a few instead of ordering in bulk.

    Comment


    • #17
      Re: Bulk Purchase versus Small Frequent Purchase

      When we started with our website, we tried the small frequent purchase method as we did not have a lot of others but it is plagued by a lot of variables which we cannot control like:

      -Frequent delays
      -Inconsistency from suppliers
      -Extra taxes

      And due to this, we never had full control over the supply chain but ever since we have switched over to the bulk purchase route, we can control the supply chain much better and this has led to better sales as well, so it is well worth investing in the bulk model to be honest.

      Comment


      • #18
        Re: Bulk Purchase versus Small Frequent Purchase

        I agree with most of the above points. Its not as simple. You have to strike a balance. And that is what you're hired for when it comes to logistics. You need to strike a balance, develop or use systems that will self-adjust or at least alert you when the inventory runs low.

        Comment


        • #19
          Re: Bulk Purchase versus Small Frequent Purchase

          I agree with most of the writers. One thing that people often don't consider is the transaction costs. It is easier to receive a delivery of 10,000 widgets than to receive ten different deliveries of 1,000. So I think the bias should be towards bulk purchases unless there's some compelling reason to do otherwise.

          Comment


          • #20
            Re: Bulk Purchase versus Small Frequent Purchase

            It depends upon the size of the company and the type of products being dealt in. For bulk purchase you need big storage capacity and the inventory cost is high. But in case of product with limited movement and short shelf life, it is always purchased in small quantity. On the other hand the purchase preference of organisations change frequently in the volatile market where demands or supply or both keep on changing. So, it is a decision taken by keeping so many factors in mind.

            Comment


            • #21
              Re: Bulk Purchase versus Small Frequent Purchase

              When buying any stock then obviously buying in bulk is going to be cheaper, but unless you are prepared then there is always going to be that risk of buying too much and then you have the issue of waste.

              If you are just starting out then buying limited amounts until you actually know how much your going to be needing is for the best, but the sooner you can start to buy in bulk, the quicker you can then maximise your profit.

              Comment


              • #22
                Re: Bulk Purchase versus Small Frequent Purchase

                Originally posted by arunava2016 View Post
                It depends upon the size of the company and the type of products being dealt in. For bulk purchase you need big storage capacity and the inventory cost is high. But in case of product with limited movement and short shelf life, it is always purchased in small quantity. On the other hand the purchase preference of organisations change frequently in the volatile market where demands or supply or both keep on changing. So, it is a decision taken by keeping so many factors in mind.

                Yes, you are right with the space requirements. Purchasing a bulk of supplies would need a proper storage area, proper means not just any area but the proper one. For example if the purchased products need to be stored in a cool place or refrigerated area, then it should not be stored just anywhere for the quality will be affected. Take note of consumable items like rice, sugar, flour which are to be stored in a specific place designed for it otherwise pests might eat it aside from the organisms like fungus.

                Comment


                • #23
                  Re: Bulk Purchase versus Small Frequent Purchase

                  Originally posted by Rob O'Byrne View Post
                  This is not a simple decision. In traditional purchasing environments buyers would buy in bulk thereby obtaining a lower unit cost. But this does not take into account the 'total cost of ownership' such as increased storage, inventory investment, shelf life and so on.

                  Really you need to understand the total 'cost to serve' for each product to make an informed decision.

                  A couple of articles here explain it.
                  http://www.logisticsbureau.com/cost-to-serve-part-1/
                  http://www.logisticsbureau.com/cost-to-serve-part-2/

                  The cost to serve approach is most commonly used on the outbound side of the Supply Chain, but is equally effective on the inbound end or total end to end.
                  Thanks for the link!

                  Comment


                  • #24
                    Re: Bulk Purchase versus Small Frequent Purchase

                    Hi, I am looking for bulk sms. Can anyone suggest me the best bulk sms service provider in chennai?

                    Comment


                    • #25
                      Re: Bulk Purchase versus Small Frequent Purchase

                      Originally posted by Corzhens View Post
                      This thread is a good one for the Warehouse manager or the Inventory manager. I think when the company is small, the purchases is usually in small bursts only particularly if their purchase is on a pickup basis and no delivery is required. Like in the nearby hardware store, when we buy gravel or hollow blocks, we have to wait until the delivery is given a schedule for the truck leaves only when it is full. But if we buy a small item like 1 piece of hollow block that we can carry home then we can get it instantly. That's the reason of small businesses. They don't buy in bulk because it can affect their cash flow - their capital will be in their stocks and their cash will be depleted.
                      Agreed. It really is difficult being stuck in the middle sometimes when you don't know how much you should be getting and there are tons of rules you'd have to put up with since you're not big enough to dictate your own and instead you'd have to live with what is comfortable with the suppliers instead of it being the other way around. I guess it is just part of what you go through while you grow as a business.

                      Comment


                      • #26
                        Re: Bulk Purchase versus Small Frequent Purchase

                        As a supplier to many different logistics and supply chain companies, I can tell you from experience that purchasing in bulk has many advantages that most likely outweigh the downside. But the main issue we encounter when dealing with some logistics companies is whether or not they have the ability to store the excess inventory. So if you have a large warehouse, and you have space to store excess inventory, the cost savings of purchasing in bulk will make that your best option.

                        If you don't have space to store a large/bulk order, the savings won't help so you're better off making smaller purchases frequently.

                        Comment


                        • #27
                          Re: Bulk Purchase versus Small Frequent Purchase

                          Buying bulk one will most likely enjoy more discount which makes cost per item on break of bulk cheaper than when buying in small frequent. If I have enough money as a businessman for items with long shelf life I will bulk purchase. This way I am surer of higher profit after sale. On the other hand for short shelf life products and with not so long expiration those ones will be ordered for in smaller amounts.

                          Comment


                          • #28
                            Re: Bulk Purchase versus Small Frequent Purchase

                            I remember hearing about some pretty advanced enterprise software that was particularly helpful in decision like this, and it made me wonder how many firms have things like that already and how much better this one could really be. I think it goes to show how important of an issue it can be though, and can save you quite a bit.

                            Comment


                            • #29
                              Re: Bulk Purchase versus Small Frequent Purchase

                              Bulk purchases are definitely the best option for business owners in my book. My brother is an owner of a small grocery/convenience store, and he always buys non-perishable items in bulk. It's the most economical way, and he also makes a profit. Perishable items on the other hand are ordered differently, due to the fact of their shelve life.

                              Comment


                              • #30
                                Re: Bulk Purchase versus Small Frequent Purchase

                                There is also a step halfway between either extreme. By placing a supply contract for deliveries over a period of time, some suppliers will allow a discount rate so you can get the bulk rate while still getting small individual orders, e.g. we have a steady order that one supplier deliver x amount of supplies every two weeks through summer, while another will deliver every two days (perishable goods). It ties you to the supplier for a period, usually weeks or months, but it means that the overhead costs of warehousing, storage, and spoilage can be kept low. The only problem with this approach is that it needs a reliable supplier.

                                It's not quite Just-in-time production which would have goods arriving at the site the day they are needed, but I still feel safer with a 48 hour safety net.

                                Comment

                                Working...
                                X