Transcript Course Title

Course Title
WINTER NAMM 2013
ESSENTIAL PURCHASING TIPS
“TOGETHER WE ALL MOVE FORWARD”
COMMUNICATION
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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.
TWO GREAT RULES OF THUMB
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“the palest ink is better than the best
memory”!
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“if it is written it is real!”
(well at least most of the time)
STARTING GATE
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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.
ITEMS EASILY CONFUSED BY PHONE
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Money
Numbers
Letters
Colors
Sizes- small- medium- large- XL, XXL
PURCHASE ORDERS & CONFIRMATIONS
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Does you business use purchase orders for
placing orders?
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Does your business request/ require
confirmations from your vendors after the
purchase order is placed?
Before the order is placed?
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ELEMENTS OF EFFECTIVE PURCHASE ORDERS
RETAIL IS DETAIL!
Your items that should appear on purchase orders
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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
ELEMENTS OF EFFECTIVE PURCHASE ORDERS
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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
ELEMENTS OF EFFECTIVE PURCHASE ORDERS
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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
ELEMENTS OF EFFECTIVE PURCHASE ORDERS
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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?
EXAMPLES OF WHY WE NEED CONFIRMATIONS
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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
WHY WE NEED CONFIRMATIONS- CONT’D
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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?
WHY WE NEED CONFIRMATIONS- CONT’D
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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!
KEEP GOOD RECORDS!
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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
EXAMPLE OF PURCHASE ORDER LIST
LOCATION #1
LOCATION #2
P.O. #
VENDOR
ORDER DATE
CONFIRMED DATE
P.O.#
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XYZ
1/27/13
1/27/13
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GENERAL SUGGESTIONS
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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
GENERAL SUGGESTIONS
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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?
GENERAL COMMENTS
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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
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
INDUSTRY PROFESSIONAL QUESTIONS
• 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?
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
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”
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
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?
THANK YOU!
• Contact Information:
Mike Guillot
Mississippi Music Inc.
[email protected]
Cell= 601-906-8046