Businesses operating in an SME (Small to Medium Enterprise) often have an intense juggling act to play in relation to stock supply and where they choose to spend their money.

In the case of one particular client, who operated in the mining and Oil/Gas space; the challenge for them was actually determined by their customers engineering departments as introducing new products was not only risky, but also had the added risk of trying to ascertain just how much to stock relative to lead time and the overall service life. Some of those risks I addressed by supply contracts and agreements, consignment stock etc. which provide a level of security to take on said risk.

Another client had extremely volatile sales as it related to the construction industry, and as such were affected by things such as weather and construction deadlines which could see sales go from all to nothing literally overnight. What was worse was at the time, supply was sought from overseas which meant that stock levels (and working capital) was enormous to account for potential (no forecasting provided) sales and the lead time which exceeded three months. To solve that, I adjusted the lead time and supply which allowed for much faster turnaround (3 days as opposed to 3 months) and supplier negotiation which got the hard cost actually lower than the imported product - which at the time was (and still is) a very rare thing to be able to do.

Ultimately; purchasing needs to have quality in three major areas:

Quality of Price
Quality of Supply
Quality of Service

If you still have questions would be more than happy to have a chat over the phone especially if you have more follow-up questions or need some more specific advice.