How cutting excess spend can boost productivity
Updated June 22, 2023
By David Sweeney | Former Regional Supply Chain Consultant
By David Sweeney | Former Regional Supply Chain Consultant
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An unseen force is eating up your budget. You’ve felt its effects but haven’t been able to pinpoint what it is. You’ve thought purchasing cards had high balances, but when you investigate why, everything seems fine. What is draining your capital?
Excess spend. Uncontrolled spending is often the result of employees thinking they need something but not knowing someone else in the company already stocked up. They THINK they need ten bolts because they are out, but you actually have hundreds in a bin on the other side of the facility. Really, whatever the reason, spending could stand a haircut. Why is this important? Start thinking about what you could do with some freed up working capital. What business wouldn’t love to reinvest that money in other areas? Need more workers? New machines? Fresh capital could help. Or maybe you just want to boost productivity in your business. That’s right. Cutting excess spending can help your productivity. 
How can you get that capital back?
Start with visibility. Knowing the analytics of your business allows you to make better decisions. Areas to focus on include inventory usage and product optimization. Finding ways to avoid excess purchasing helps your bottom line. Consider an Onsite program. If you aren’t holding the inventory yourself, your costs take an immediate drop right there. Automatic win. Look for a strategic partner. This is basically hitting the easy button when it comes to visibility and inventory. You use the partnership as an opportunity to shift the monitoring of your inventory to someone else. Once they are up and running, it’s on them – not you – to stock and order. As an added bonus, you get a certain peace of mind with this kind of agreement because your partner’s main goal in managing your inventory is to make sure that your business is always as efficient as possible. Wait, how’s this cut down on excess spend? Visibility will help you control purchasing, especially if you partner with an industrial supplier. Relying on a company with expertise in supply chain management puts time back in your day and shifts the burden of inventory management to them. An example: If your employees are currently putting needed items on P-Cards, they don’t have to know who else is buying the same thing. An inventory partner has to know. They need to make sure two different departments aren’t ordering twice the needed amount of parts. Because in the end, if those purchases become dead inventory, they have to eat that cost. 
Because you haven’t read this word enough yet, let’s talk more about visibility. If you do decide to find a strategic partner, you want to get as much data from them as possible.
Vending solutions are out there that allow you to pull all sorts of data. And vending machines can be put right at the point of use. That means workers don’t have to walk to find what they need, it’s already waiting for them right by their station. When they punch in a code or swipe their badge, workers get what they need and you get the analytics, the pulse of your business. And if you found a strategic partner, they are looking for ways to improve YOUR business. Because, in the end, that helps their business. So they set up quarterly business reviews with you and talk about tweaks that could be made to boost your productivity. What’s the big takeaway? Visibility (there’s that word again) is good. You want it so you can better control your inventory. Spending time and money on supply chain isn’t as easy as having a partner who will manage it for you. Whether you tackle these steps on your own or start looking for a strategic partner, you should free up working capital and reinvest that money in whatever it takes to hit peak productivity. You may also like:
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