We will tell you about the pros and cons of procurement and where to buy more profitable.
Buy finished products and materials or invest in your own production?
When we talk about purchasing, we mean buying something for ourselves. Production is the manufacture of materials and components not only for their own needs but also for sale. The main thing is that production is universal.
To make a decision, it is worth weighing all the risks. Most often this is a large overhead because there are the main means of production: a workshop, utilities, workers’ salaries, etc. Large production yields lower cost, but less mobile, especially in times of crisis. The crisis does not reduce taxes and other mandatory costs.
There is also a risk that the manufactured product will suddenly cease to be in demand. Think about the Polaroid company. At one time, a huge number of specialists and scientists worked for it, the company’s strategy was very developed, the technology was complex and unique, so there were no competitors. At one time it was the best company in the segment. But as soon as digital photography appeared, things began to decline and the production went bankrupt.
To decide on production, you need to answer the strategic question: “Make, buy or ally”?
Make. An excellent option if production is flexible, versatile, and quickly rebuilt.
Buy. It’s inconvenient to produce everything. The good thing about buying is that you can choose different options on the market or make it profitable to order, for example, in China.
Ally. For example, Apple manufactures all of its equipment in China and works with Foxconn.
You should always consider what will be more profitable – to buy or to produce. You can spend huge amounts of money on the purchase of some parts, the production of which is not so complicated and expensive. Moreover, if you have some kind of sales market.
In our company, we work with clients in the following way: if it becomes clear that purchases are too expensive, we will offer to organize production and find machines and the necessary equipment at competitive prices.
Where to buy – in domestic or foreign factories?
There is no universal advice here. You need to look at the quality of the goods and the speed of delivery.
For example, in Russia, the plant produces motors for fans. Very old equipment, 3 months old. Products are noisy, unreliable, energy-consuming, heavy, and bulky. At the same time, they cost 500 rubles.
But in China, the price of such engines is 350 rubles. It takes 2 months from the moment of ordering to arriving at the warehouse in Kazan. They are quiet, last at least 10 years, and generally better.
Why does it happen? China exports a lot and improves equipment under international requirements. Therefore, cooperation with him is usually fruitful.
But don’t get hung up on it. You always need to monitor and do it constantly. The market is changing, exchange rates are changing, and, for example, PVC resin, depending on the dollar and the ingredients, is better to order in Russia.
The main thing is to remember that there are no identical products and materials, we compare innovation, quality, and many, many factors. And also – we take into account the size of the delivery. If the goods are less than a ton, then there is no point in driving anything from China. It will cost more.
What are the benefits of outsourcing purchases?
You don’t have to do almost anything yourself. For example, we say: name the criteria that you need. The client calls, we search. At the same time, we try to follow our checklist – speed (should be fast), cost (not always, but it is better to look for more profitable), and quality (the most important thing).
There was once a customer who needed a technical fabric. It was too long to wait 4 months from Russia, so they asked me to look for an alternative. We asked for technical data, the client gave a specific density and shielding.
We found such a fabric, brought it, and it turned out to be better in quality. There was a completely new technology that the client had not yet encountered and at first, even decided that it was impossible.
Sometimes it happens that domestic goods are delivered faster because the plant is very close. Then we look: if a client periodically buys this product, then we will have an approximate forecast of deliveries – stable and profitable. Here the term will no longer be so important.
You can get advice on deliveries here