10 Purchasing Strategies I

15 Purchasing Strategies I

The purchasing strategy is a contingency policy and method based on market changes in order to achieve purchasing goals. This article will introduce 15 purchasing strategies recommended for consideration in foreign trade from different aspects including quality, packaging, price, order quantity, and discount.

1.  Quality—15 Purchasing Strategies

For purchasers, good quality means meeting the requirements or specifications agreed upon in the sale. Therefore, purchasers should try to understand the degree to which the supplier knows or understands the quality of their products. In addition, suppliers with better management systems should have the following quality documents:

  • Quality Certificate
  • Commodity inspection certificate

The purchaser should obtain the above information from the supplier. In China, the product implementation standards for commodities include national standards, professional (ministry) standards, and enterprise standards. And these are divided into mandatory standards and recommended standards. But usually, in a contract or order for sale, quality is expressed in one of the following ways:

  • Grades of goods in the market
  • Brand
  • Standards commonly used in business
  • Physical or chemical specifications
  • Performance Specifications
  • Engineering drawing
  • Sample (seller or buyer)

When purchasing, purchasers and suppliers should first reach mutually agreed quality standards for the quality of the goods. Where possible, suppliers should be asked to provide samples for storage to avoid subsequent disputes or even legal proceedings. For defective products or goods damaged during warehousing and transportation, purchasers should request a return or refund when purchasing.

15 Purchasing Strategies I

2. Packaging —15 Purchasing Strategies

Packaging can be divided into two kinds of inner packaging (PACKAGING) and outer packaging (PACKING). The inner packaging is used to protect, display, or describe the goods, while the outer packaging is only used for storage and transportation protection.

Well-designed inner packaging can often increase the customer’s willingness to buy and accelerate the return of goods. Purchasing staff should persuade suppliers to learn from good companies in this regard. And they should also improve them to facilitate each other’s sales. In addition, purchasing staff, during the project, should first understand the policies of the supermarket. And then they should negotiate with the supplier about the packaging that is most beneficial to each other. Otherwise, you should not order rashly.

If the outer packaging is not strong enough, the storage and transportation damage will be too great. And this will reduce the operating efficiency and affect the profit. If the outer packaging is too strong, the cost of the supplier will increase, and the purchase price will inevitably be high, which will cause the price of the product to be uncompetitive.

15 Purchasing Strategies I

3. Price—15 Purchasing Strategies

Price is perhaps the most important item of all purchases. Before purchasing, the purchasing staff should investigate the market price in advance, and should not be mistakenly trapped by the supplier’s one-sided words. If the market price of the same product is not available, you should refer to the market price of similar products. In addition, we could also obtain fair and reasonable prices through separate purchases with suppliers or bidding by several suppliers.

When purchasing separately from suppliers, the purchasing staff is best to analyze the cost or price first; when several suppliers are bidding at the same time, the purchasing staff should select two or three lower bid suppliers and then purchase with them separately, to find the most reasonable price. However, when using the bidding method, purchasers must not think that the supplier who can provide the lowest price is the best supplier. We must consider all aspects of delivery, after-sales service, sales support, and other sponsorships.

15 Purchasing Strategies I

4. Order amount

When not sure about the order quantity, the purchasing staff should not easily promise or blindly follow the opinions of the supplier to order unnecessary quantities. Otherwise, once the inventory is unsaleable, we must reduce the price to clear the inventory, which will affect profits and cause a backlog of funds and a waste of space.

However, the purchaser should negotiate with the supplier for a reasonable minimum order amount or quantity, preferably in terms of amount. Otherwise, if there is no minimum order amount or quantity limit, if the order quantity for each order is too small in the future, requiring frequent delivery by the supplier will increase the cost to the supplier and both parties will suffer losses. Conversely, if the minimum order quantity or amount is too high, it will lead to excessive inventory, which will bring risks such as holding positions, slow sales, and selling at reduced prices.

5. Discount

Discounts usually include new product introduction discounts, quantity discounts, rebate discounts, promotional discounts, no return discounts, seasonal discounts, distribution discounts, and so on. Some suppliers may use no discount as the starting point for purchasing. Experienced purchasers will quote various forms of discounts and ask suppliers to give in.

Purchasing personnel should explain to suppliers that if the discount of the supplier cannot be so great as to impress consumers, even if we place an order with the supplier, this relationship cannot be lasting for the express purpose of obtaining a reasonable discount.

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