Here's the key to shrinking unplanned spend
December 30, 2024
By the Blue Print Editorial Team
By the Blue Print Editorial Team
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Unplanned spend, spot buys, emergency orders. Whatever you call it, unplanned spend is the most expensive way to buy things. Expediting fees, built-in lead times, and the labor cost of placing orders all make it a costly way to get what’s needed. The goal should be to shift as much spend as possible to planned because it’s cheaper and faster.
Maybe you’ve heard of the industry belief that unplanned spend hovers somewhere around 40%. We believe it’s much less. The reason no one feels that way, though, is due to the sneaky nature of the spending. It can be hard to recognize some of the patterns when the purchasing is sporadic. Ask this about your spending. Is there repetition? Is there a pattern? If so, then you can attack it. Even if you’re only buying an item 4-6 times a year. The key is to have a plan in place to detect patterns so you can take action on that intel. Tackling the problemThere are a few ways to start seeing the repetition in your work. Two that work either separately or in tandem are vending programs and dedicated service models. (More on those in a bit.)
Vending is good because it puts inventory right where your workers need it. It helps with spending because it lets you track what's being used. That means you get insights into trends, and it also gives actual usage data. It allows you to be proactive. Say you implement a vending program. You’ll want to keep checking on it. What’s being used the most, what can be tweaked, and what can be removed. Putting inventory at the point of use isn’t the end of the story. It’s part of the answer, but so is awareness. If you have an item in your vending units that your team isn’t using, you’ll take it out and replace it with something they do need. Vending's never a static fix. It evolves with your work. This is what your spending should be doing: evolving. Seeing the forest...When you’re involved in the day-to-day of your work, it can be hard to see the patterns. Making an emergency order from time to time doesn’t give you a chance to see the repetition. But a dedicated service model can change that.
Having a local supplier focused on just your work changes the dynamic. Because they are focused solely on your needs, they can study the usage data and find the patterns. At Fastenal, this dedicated service model is called an Onsite, and it’s unique for every location. No cookie cutter solutions here. Instead, you get a person (or team if needed) that makes it their mission to learn your work, streamline your inventory, and improve your processes. The key is understanding the repetition. Once they find the cyclicality of your ordering, then they determine the best way to manage and stage inventory. Is there a high-frequency need? Put it near the point of use in a vending device or e-bin. Next stepsThe reality is that unplanned spend is a part of life. When something is truly unplanned, it’s unforeseeable. For those situations, eCommerce is an efficient fulfillment solution. But when there’s a bit of repetition to the purchasing, why should you have to order it? Why can’t it just be there when you need it?
If you’re still reading, you already know there’s a better way. You can transform unplanned spend into planned spend. (And gain greater financial control.) It can be done. If you need a hand along the way, Fastenal can help! You may also like:Vertical Divider
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