Control and management
Centralized purchasing systems provide greater internal control. The primary benefits being the ability to control costs on individual products. In any given week, Patio Pools & Spas may need the same particular product in three different retail stores as well as on a project site. However, each location was not aware of the needs of the other departments.
Now that the company uses centralized purchasing, which integrates into a business management software program, any computer or mobile device on the system can see stock at the main warehouse, as well as at any assigned ‘warehouse’ location. The software allows the creation of a ‘warehouse location’ for each retail store and every service truck. For example, anyone can log-in to find out if a pump or a filter is in stock at any of these ‘warehouses.’ The company trucks move between the stores and the project sites so it is easy to move required parts within the system.
“Our purchasing has become much smarter,” says Patio Pools & Spas’ vice-president, Nicole Ragel. “We are now able to establish true re-order points with such precision that we can have re-order points based on the time of year—with seasonally adjusted minimum and maximum levels. This allows us to take advantage of price discounts so we can get better volume discounts if we order a pallet or a truck load rather than a few at a time.”
After careful examination, the company realized it was losing a substantial amount of money on shipping costs by not ordering products in higher volumes.
“When we order large quantities, our freight is usually reduced or waived by the vendor,” says Ragel. “Because of the centralized purchasing, the individual unit cost of the purchased product is now much lower. Having the lowest possible cost for the product, allows us to remain competitive against big-box retailers.
“We attribute a great deal of why we are a successful specialty retailer to the fact we are now smarter about our purchasing.”
