Bulk Buying

leo g_13

buy your parts in bulk? I was interested in finding out if the wholesaler could do better. Some of the material they quoted was quite a bit better priced. But then do I want to buy at a better price and store this stuff, or pay my regular and let the my wholesaler store it for me?

any thoughts?

Leo G

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Geno_15

You may have to pay the tax man a little extra too. Buying in bulk is cheaper but only for things you'll use within 6 months or so. Even the supply houses don't stock like they used to which is becoming a pain inze butt.

Dale

Accounting

Spent alot of time on the cost of inventory turnover in a cost accounting class a few years back, this is one of those things that the larger you get the more you want to know about. In most places tracking cash flow and cash on hand is key to profitability. If you buy in bulk you have put out cash for something that can't be readily converted to cash, not usually a good idea. Find yourself a book or an accountant that gives you a clear idea of the financial tradeoffs of buying in bulk. Just in time parts purchases was pioneered by the foriegn car companies and now used by all car companies as well as the wallmarts of the world, must be money in it.

Geo_2

Bulk

Nothing wrong with buying in bulk the stuff you use everyday, I buy 100 count 20" no-burst faucet supplies for $1.48 each, supply house charges me $4.16 each, $4.00 flappers for .70 cents.Watts style(same damn thing) laundry valves $10.00 not $24.00. I do mostly jobbing and the savings really adds up big time.

joel_19

hmmm

I don't know when we saw what was happening to steel back in march we pre bought all the Metal, ducts, fittings etc I could stock. If you bought steel stocks on the market and they doubled in a few months you'd be happy right? So what's the difference in buying say 10k in material that you know will cost you 15k a couple of months later due to price increases??

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Brian_19

Bulk

I always buy in bulk. Not only do I save money on the parts. I also save time by not going to the suppply house every day. My two local suppliers have a product show every year in March. They have great price discounts right from the manufacture. I save on average 15 to 20 percent on stock items like pumps, Spirovents, tubing, fittings ect.
They all get use up by years end.

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Scott Denny

Buying in bulk.

This is a complicated question. Bulk buying requires a place to store the material, with some material that means indoors. Space costs money. Bulk buying means having lots of stuff lying around to tempt less than 100% honest employees. However, having it on hand keeps your people out of the supply house and hopefully on the job. Purchasing definitely conforms to the economics of scale. The major caviat is, "Only buy what you can move". I make a lot of direct purchases from manufacturers where I'm buying out of a catalog (print or on-line). My supplier puts 5% on the purchase and, if I'm careful enough to meet the minimum, it comes freight free no matter how bulky. The down side to this is I sometimes get something other than what I thought I was getting.
With cast iron, steel and copper going thru the roof this year, I've had to hustle more than once to get an order in before the next price increase. I see buying as a game where the better I play, the more I save. Somethimes buying right doesn't mean buying in bulk, but rather buying from the right distributor. For example, I used to by my hangers, allthread, etc. from a plbg. supply house. After checking out the price at a company that sells these things as a major source of revenue and not a side line, I quickly switched over to them and found a savings of 30-40%. I almost opened up a plumbing showroom to take advantage of the deeper discounts distributors give showrooms vs. plumbing contractors. Unfortunately, unless I went into it in a big way, the savings wouldn't cover my estimated overhead.

hr

In your case Joel

you were able to see the increase coming and had a bunch of jobs where you would turn the inventory.

With all the price increases it's more important than ever to run a job costing program after completion to see how it compares to your initial bid. Need to have the installers make an accurate parts list to assure nothing is slipping through the cracks.

If you buy lot sizes and discount the saved amount to the customer, you're just flipping dollars. That money could do much better in other investment.

I suppose that's part of the reason the wholesalers have cut way back on inventory, especially low turn stuff. The saved money could be put to better use, maybe buying or opening more branches

hot rod

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Weezbo

I think it a good idea

to look at your projected work load and make purchases ahead of time hopefully at some small discount and make the attempt to have the materials on hand when you need them rather than falling prey to the old and treacherous who go in and buy every last one in sight off every store supply shelf they can find ..leaving you so wonder where your going to get X new boilers and water makers Right Quick.