Carefully Consider Vendor Offers

Published on: June 17, 2016

Often vendors offer a bigger discount or other considerations for placing a larger order. It is tempting to always increase the size of a replenishment order to “get the extra five percent discount” or “qualify for free freight”.  Sure, buying at a lower unit cost will always increase your gross margins and profitability. But, will […]

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Is Free Freight Always Free?

Published on: January 15, 2013

One of our clients is continually overstocked.  Management is frustrated that they are not achieving their return on investment goals.  They couldn’t understand why, after working hard to establish replenishment parameters that would optimize their inventory investment, the company was still far from achieving effective inventory management. I looked at their inventory and found that […]

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When To Take Advantage of a Vendor’s Special Offer

Published on: September 19, 2012

Many vendors offer larger discounts when you buy more of their products. But how do you know whether these offers are really good deals? This month we will show you a quick and easy way to decide whether or not to take advantage of a price break. In our example the vendor offers us three […]

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Deciding How Much to Buy

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In today’s economy we see many companies emphasizing “cash flow management” over profitability. That is, they are willing to sacrifice some profit dollars in order to invest smaller amounts in inventory. If you find yourself in this situation, I have an alternative reordering strategy that may meet this need for many of you. When placing […]

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The Advantages of a Corporate Replenishment Department

Published on: February 1, 2012

About this time last year I worked with two large distributors that allow their individual branches to completely control the replenishment of the products they stock. Each location’s management, buyers, and/or salespeople could replenish stock whenever they felt it was necessary with either a vendor purchase order or a transfer from another company location. Management […]

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Terms Discounts vs. Extended Terms

Published on: April 1, 2011

Occasionally a supplier will provide you with an “incentive” for paying an invoice before its due date. These are often referred to as “terms discounts.” A common terms discount is “2% 10 Days Net 30 Days.” This means that while the vendor expects to be paid within 30 days of the invoice date, he or […]

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Do You Have an Early Warning System?

Published on: June 1, 2004

Most computer systems provide buyers with out-of-stock reports. These are listings of stocked products with no available inventory. Because the stock-out sales orders cannot be filled, salespeople cannot provide the service their customers expect. Buyers scramble to obtain inventory to prevent the “crisis” of the out-of-stock situation from becoming the “catastrophe” of losing those valuable […]

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There’s No Such Thing as Free Inventory

Published on: January 2, 2000

A few weeks ago a Canadian distributor emailed me with a very interesting situation: “The vendor of one of our seasonal product lines has an interesting program to encourage us to stock a lot of their products. At the end of the popular season, they give us a full credit for all of our remaining […]

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When the Price Goes Down, How Much Do You Buy?

Published on: February 5, 1999

Sometimes the cost of an item will be dependent on how much is purchased. For example, Foyt’s Racing Supplies offers the following discount schedule for the #AJ 3000 Brake Pads:   Quantity Unit Cost Discount Net Unit Cost 100 10.00 5% 9.50 500 10.00 7.5% 9.25 1000 10.00 10% 9.00   The current usage rate […]

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How Much Is Free Freight Worth?

Published on: February 2, 1999

Many vendors offer to pay freight charges if an order exceeds a certain minimum requirement. Many buyers are “brainwashed” into thinking that they must always place an order that meets the free-freight minimum, even if it means bringing more inventory than can be used or sold in a reasonable amount of time. But is placing […]

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