Improve Ordering Practices to Reduce Costs

Cost containment is essential for businesses and corporate organizations to yield more revenue and improve their profits significantly. The underlying problem is that business executives must determine where to focus on achieving the desired results. Creating certain good ordering practices can be simple and cost-saving.

One of the best places to start is in your procurement and supply chain management. But reducing costs through your ordering process goes beyond purchasing and shipping cheaper materials. You should tackle it holistically and nip the issues in the bud. 

At Expense To Profit, we provide business executives with strategic insights to lower their overhead expenses and improve their bottom line. 

So, how do you reduce costs from your ordering practices? We look at some foolproof methods below: 

Forecast Demand

If you wish to cut costs, you cannot minimize the importance of forecasting client expectations. Your bottom line is at risk if you overorder resources since you will continually be dealing with products that could become faulty if customers don’t claim them. More obviously, it has an impact on your company’s cash flow.

On the other hand, under-ordering is also an issue because you will have dissatisfied consumers, some of whom may look to a competing company as a replacement.

To cut expenses accurately, you must estimate client demand and secure resources. Examining and analyzing historical sales data and market trends is one of the most significant ways to accomplish this. An understanding of a pattern can be used to predict future client requests.

For instance, you can plan for ingredient availability by identifying busy times if you own a restaurant.

Establish and Set Reorder Points

You can establish and define reorder points for your business resources and precisely estimate customer requests. Reorder points are just the minimum quantity of your product(s) that must be ordered from the vendor.

This is especially important if your company’s supply chain takes an extended period to deliver your purchased items. Before the remaining stock runs out, a new shipment arrives, and business continues as usual.

You will manually order goods and materials when supply is low without establishing a presale limit. This could harm your company because there will be a break in product and service delivery while new supplies arrive.

You can create reorder points by evaluating your previous sales and historical data. 

Take Advantage of Technology

Humans make errors; this often impacts your business’ bottom line. To prevent this, you should use technology to streamline your ordering process. An automated inventory management system will reduce technical errors and allow you to track reorders successfully. 

Consolidate Orders

Another way to reduce expenses, especially from your supply chain, is to consolidate orders with your vendors. Imagine your procurement department places an order for Item A today, Item B tomorrow, and Item C next to the same vendor. You will have to pay shipping costs differently to receive those items in a short amount of time. 

Consolidating Items A, B, and C with the same vendor can significantly reduce your shipping costs and save you time in receiving them. If you have not considered this a cost-saving method, you should.

Negotiate With Vendors

Negotiating with your respective vendors is also vital for saving business costs. You may not be aware, but Your Vendors May be Overcharging You Without Your Knowledge. Vendors are prone to increase their pricing for no reason. 

Our previous article explored how vendors can increase pricing because they can and not because they need to. It is essential to contact your vendors and renegotiate the pricing of your stocks.

First, you need to determine the market cost of those items to ascertain if your vendors are pulling a fast one on your business. If you have a long-term relationship with your vendors, you can negotiate your current deals with them or ask for discounts. They will be more receptive to changes compared to newer vendors. 

However, if your vendors do not bulge, you can terminate pending contracts and begin hiring a new vendor. One of the best ways to achieve that is to implement eSourcing for Reverse Auctions

Read our blog on How to Select and Manage Your Vendor Partners.

Track Inventory Levels

Beyond setting a reorder point, you can periodically monitor your stock to identify its levels. You do not want to overstock and risk resource obsolescence. Ensure your procurement team monitors your inventory levels, even if they rely on technology to send triggers to reorder goods. 

These practices will increase efficiency, order accuracy, and overall inventory management.


Creating certain best ordering practices for your business will save your business money and create established standards that are easy for anyone to understand. This is the type of easy streamlining a business can put in place where it positively affects your bottom line without too many pain points. Expense to Profit is a leading cost-reduction consultancy created to help businesses improve their profit margins while lowering expenses. We can improve your bottom line with proven and tested strategies tailored to your needs.

Call today for a free consultation and expense reduction analysis.

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Marc Freedman

To help you achieve your company's financial growth goals, Marc serves as our Chief Cost Advisor, providing advice to client management teams. He is highly regarded as an expert in his field, and he frequently collaborates with and contributes to other spend consultants to develop and implement cutting-edge strategies for their respective clients.

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