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Course Title. WINTER NAMM 2013 ESSENTIAL PURCHASING TIPS. “TOGETHER WE ALL MOVE FORWARD”. COMMUNICATION. COMMUNICATION- Such an important word but how successful are we at effective communication?

callie-adams
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  1. Course Title

  2. WINTER NAMM 2013ESSENTIAL PURCHASING TIPS “TOGETHER WE ALL MOVE FORWARD”

  3. COMMUNICATION • COMMUNICATION- Such an important word but how successful are we at effective communication? • Webster says that communication is “the interchange of thoughts to result in directness of action. Usually done by speaking, telephone, telegraph, couriers, radio, or couriers.” • The 2013 Google definition is about the same but the telegraph has been replaced with email and texting.

  4. TWO GREAT RULES OF THUMB • “the palest ink is better than the best memory”! • “if it is written it is real!” • (well at least most of the time)

  5. STARTING GATE • Communication is a two-way street, so find out what your vendors need from you to make things run smoothly • Explain what you need from them and update as needed to keep the lines of communication open.

  6. ITEMS EASILY CONFUSED BY PHONE • Money • Numbers • Letters • Colors • Sizes- small- medium- large- XL, XXL

  7. PURCHASE ORDERS & CONFIRMATIONS • Does you business use purchase orders for placing orders? • Does your business request/ require confirmations from your vendors after the purchase order is placed? • Before the order is placed?

  8. ELEMENTS OF EFFECTIVE PURCHASE ORDERS RETAIL IS DETAIL! Your items that should appear on purchase orders • Company name • Complete company address- billing and shipping, store location, location number for multiple locations, • Company contact name & email address • Account number • Purchase order number • Purchase order date

  9. ELEMENTS OF EFFECTIVE PURCHASE ORDERS • Shipping method details and freight agreements • Ship to address • Requested receipt date & place for ETA from vendor • Detailed terms • Vendor item numbers- CAUTION!- your inventory # may not match • Line item numbers • Item descriptions- this can sometimes help with incorrect item numbers • Well defined quantities and units of measure

  10. ELEMENTS OF EFFECTIVE PURCHASE ORDERS • Vendor name • Retail price • Expected cost prices- ?? and extensions • Invoice discounts or specials • Number of pages • Fax number • Name of person order was sent to or who took the order if verbal • Signature line

  11. ELEMENTS OF EFFECTIVE PURCHASE ORDERS • Statements explaining terms of the purchase order and information needed for the purchase order to be valid • Back orders- allowed or not? • Consolidated or split shipments? • Cancellation policies? • Scheduling dates?

  12. EXAMPLES OF WHY WE NEED CONFIRMATIONS • Incorrect items / model numbers • Many companies have several items in their system with the same item numbers • Sheet music and music books product numbers • Incorrect quantities- as a result of human error or units of measure • Shipping to incorrect location • Incorrect colors • Incorrect sizes • Incorrect brand names or strengths on reeds

  13. WHY WE NEED CONFIRMATIONS- CONT’D • Incorrect prices and extensions • “specials” are not always communicated to the company computer on all items • Accounts payable needs to know exactly what to pay on the invoice and when to pay it • To be sure the order was actually received?

  14. WHY WE NEED CONFIRMATIONS- CONT’D • Do the cost prices quoted on the purchase order confirmation apply to any and all future shipments on this purchase order? • Prices can change before the item ships but you need a guarantee on what you will be paying and when • TERMS- there are a myriad of terms and that is why I suggest detailed terms should appear on the Purchase Order • Open, net 30, 30/60, 30/60/90, 30/60/90/120, master order, fall terms, winter dating, school bid terms, credit card; early pay discounts; flooring terms- no interest, delayed interest, check in advance, COD • Check closely to be sure that the correct terms appear on the confirmation. • ETA- They want it WHEN?? INSISTENCE AND PERSISTENCE ARE THE KEYS!

  15. KEEP GOOD RECORDS! • List of purchase orders placed and confirmed with dates on both • Follow up daily/ weekly to be sure all purchase orders have been confirmed properly • Sometimes we “think” an order is placed and it has not • Vendor representative out sick, vacation, junk mail, etc. • Example following this slide

  16. EXAMPLE OF PURCHASE ORDER LIST

  17. GENERAL SUGGESTIONS • Reminder- dot all of the “i”s and cross all of the “t”s before moving on to lunch, dinner, or personal conversations with the vendor representative • Don’t be too hard on yourself if you leave something off- you will get it the next time. We all learn best from our own experiences and mistakes

  18. GENERAL SUGGESTIONS • Correction of errors- BE PROMPT! Phone calls are OK but always confirm the discussion via email and request a reply on the email correspondence. • Some companies provide confirmations but have limits on the amount of time you can challenge errors. These range from 1 hour to 24 hours • Should you have a disclaimer on this?

  19. GENERAL COMMENTS • PRAISE AND COMPLIMENT those who perform well in this process! They won’t forget you and will continue to make your life run smoothly! • Keep good records since your vendor contacts may change quickly • Forward confirmation information to accounts payable, receiving, and sales associates as needed

  20. FREIGHT • Freight- prepaid? ½ freight? • Are you using NAMM Partnership? Other freight brokers? • Examine your freight costs by vendor as a % of the total invoice • Nothing in life is FREE but freight is often easier to negotiate than discounts on products • Does free freight apply to all shipments (when back orders are allowed) or only the initial shipment on this purchase order

  21. INDUSTRYPROFESSIONALQUESTIONS • How do I negotiate better deals without spending more money? • System for keeping up with who has the best deal? • Criteria for consolidating to save MONEY? • Additional questions?

  22. HELPFUL HINTS  • Two, three, and four heads are always better than one; involve others in decisions • It’s only a deal if you NEED it? Price should not be the only consideration • Supplier relationships should be partnerships

  23. MORE HELPFUL HINTS  • Good relationships require fair treatment of both parties so negotiation should also be done in a professional manner • Maintaining that long term relationship is much more important than knocking out a one time “killer deal”

  24. MORE HELPFUL HINTS  • More inventory = Happy customers but buyers have to consider: • 1. GMROI- Gross Margin Return on Investment “gross margin dollars/average inventory” 2. Product turns- 1 month, 3 months, 6 months? 3. Products “life expectancy” to be COOL 4. Seasonal sales and products

  25. CLOSING IDEAS ON PURCHASING? Can I sell it and make money selling it? How many can I sell? How long will it take me to sell it? How long do I have to pay for it? Can I provide service after the sale?

  26. THANK YOU! • Contact Information: Mike Guillot Mississippi Music Inc. Email=Purchasing@missmusic.com Cell= 601-906-8046

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