How Strategic Raw Material Procurement Can Help SMEs

As a small business owner, you’re always looking for ways to cut costs and make your operations more efficient. The best way to do that is by negotiating with suppliers for the best possible prices. But how do you know when it’s time to shop around for new suppliers? The answer lies in understanding how strategic raw material procurement can help SMEs — and what steps you should take when deciding on the right supplier.

There are ways SMEs can be more strategic about raw material procurement. A procurement strategy is important because it gives your company a clear vision of where you want to be with raw materials. It also helps you plan for the future. When you’re ready to start buying raw materials, you should have a good idea of what kinds of supplies and products would be best for your business.

Get in touch with OfBusiness to source and ensure a smooth raw material procurement process with genuine materials directly from the supplier.

Understand and widen the product range

The first step in developing a strategic raw material procurement policy is to understand your business and your customers. Once you have a clear idea of who you’re trying to serve, it’s time to look at how they get their raw materials and why.

This exercise will help you identify the gaps in the market that can be filled by your company, as well as any areas where there are already strong competitors. Understanding what’s out there will also help you avoid making the same mistakes as others (and save money on unused inventory).

Assess your needs

What are you using raw materials for? Do you need them frequently or infrequently? If the latter, do you have enough stock on hand to last until you order more? If so, consider bulk raw material procurement or on an as-needed basis. This will save money in the long run because shipping costs will be lower when buying in bulk quantities and also reduce overhead costs associated with storing products in smaller containers over time (since storage space is likely limited).

Modify operations to suit raw materials

There are several ways that you can modify operations to suit raw materials. The first is to change the production process itself. For example, if you need a new type of metal or plastic and there is no supplier in your region, it might make sense to invest in setting up your own supplier network or even start producing these products yourself. In this case, it would be useful to hire experts who understand these materials and how they can help your business grow in the future.

Another option is modifying product design: if there aren’t enough suppliers for a certain part of the world where sales are booming but supply availability isn’t keeping pace with demand (for example), then consider redesigning products so that they don’t have any components made from those raw materials — or at least modify them so that those components are produced elsewhere. Finally, if none of these options work out for whatever reason then there’s always packaging: using different types of containers will allow you access to some types of raw material even though others might not be available locally.

Consider all costs associated with raw materials

When purchasing raw materials, it’s important to consider the total cost of ownership. This includes not only the cost of your purchase but also transportation, storage, and taxes.

Track price fluctuations

Price fluctuations can present significant savings for your business. However, if you don’t keep an eye on them and act quickly, those savings can go out the window. To effectively track prices, you need to know what they are at any given time. The easiest way to do this is through centralized platforms like OfBusiness.

Choose the right supplier

In business, relationships are everything. The more you can build and maintain relationships with your suppliers, the better your business will do in the long run. The first step in any procurement process is research. You need to know the market, the quality of products, and the service levels that are available. This is why we recommend you begin by researching raw material suppliers. Verify their certifications (eg. ISO 9001 or 14001 etc.). Do your due diligence before making any big purchase.

In conclusion, to ensure your business is running efficiently and effectively, it’s important that you have the right raw materials on hand. In order to do this, it’s necessary for you to strategize about how much of each material you need at any given time or stage of production.