Supermarket Purchasing Process (Part 1)
Commodity purchasing is just like the production department of a manufacturing company, it is the beginning of business activities. Supermarket commodity procurement refers to the process in which supermarkets purchase goods from suppliers. The business activities of supermarkets are to purchase goods from suppliers and then sell the goods to customers to make profits.
So if you can purchase good and best-selling products, you will achieve half of your sales. Doing a good job in product procurement and management is one of the prerequisites for a supermarket to operate normally.
The guiding ideology of product procurement is: to purchase the highest quality and best-selling products at the most appropriate time and at the most favorable price.
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1. Functions and principles of commodity procurement
1. Functions of commodity procurement
l Develop new products, develop New suppliers
l Eliminate unsaleable goods and eliminate bad suppliers
l Control procurement payments
2. Principles of commodity procurement
l The principle of conforming to the characteristics of the business format
l The principle of conforming to the product mix
l The principle of conforming to the high turnover rate
l The principle of conforming to the gross profit rate target
l Comply with the principle of safety and health
l Comply with the principle of advancement and retreat
l Comply with the principle of non-business income
l Pursue differences principles
3. Commodity procurement management
Basic content:
l Choose appropriate suppliers
l Choose appropriate quality
l Choose the appropriate time
l Choose the appropriate price
l Choose the appropriate quantity
Key points of procurement management:
l Positioning management: Make the products "in their place" according to the provisions of the store configuration and product display list to create the best performance.
l Digital management:
n sales volume;
n turnover rate = average sales * average inventory amount; the supermarket’s commodity turnover rate is measured monthly or Calculated on a quarterly basis, the normal turnover rate is 4 times per month; however, the current turnover level of products in domestic supermarkets is about 1-2 times. If the turnover rate of products is less than 1 time, they can be listed as priority products for elimination.
n Cross ratio = slew rate * gross profit margin; the standard cross ratio of foreign products is more than 100, while the current cross ratio level of domestic supermarket products is about 30-50. If the cross ratio is below 30 If so, the products will be prioritized for elimination; otherwise, the procurement of products with a high cross-over ratio should be strengthened to expand the overall benefits of the supermarket.
l Quality management:
2. Product procurement methods
According to different classification standards, supermarket product procurement methods are as follows:
1. Classification by purchasing area
l Overseas procurement
Applicable to goods that are cheaper than domestic prices, and goods that cannot be manufactured or supplied in insufficient quantities domestically. For example, the world's retail giant Wal-Mart has a huge amount of overseas purchases, purchasing billions of dollars of goods in China alone every year.
l Domestic Procurement
Applicable to government-controlled imported goods and foreign products with very small demand; when the quality and price of domestic and foreign purchases are the same, because domestic purchases The safety margin is low, the transaction process is simple, and the after-sales service is relatively fast, so domestic procurement is prioritized.
2. Classification according to the method of procurement
l Direct procurement
Eliminate the price increase of middlemen and purchase directly from manufacturers; it is the most important supermarket Procurement methods
l Indirect procurement
Procurement of goods through middlemen,
l Entrusted procurement
Supermarkets entrust middlemen to purchase, Such as entrusting agents to purchase
l Joint purchasing
A cooperative purchasing method carried out by small and medium-sized supermarkets in order to gain the advantage of large-scale purchasing. It brings together supermarkets in the same industry to order from suppliers.
3. Classification according to the method of transaction with suppliers
l Purchase and sale method
Also known as distribution; buyout; that is, with the detailed records in the supermarket computer system Supplier and product information, when checking out, on the latest payment date after the expiration of the account period (number of payment days) stipulated in the purchase and sale contract approved by both parties, the purchase price and receipt of the goods agreed upon by both parties when purchasing the goods. Quantity payments to suppliers.
l Consignment sales method
According to the detailed supplier and product information recorded in the supermarket computer system, on time on the monthly payment date, according to the current sales volume and the original purchase of goods approved by both parties. Pay the supplier the price of the goods. Returns that cannot be sold out at this time are one of the conditions of the transaction.
l Joint venture method
The supermarket’s computer system records detailed supplier information, but does not record detailed purchase information of the products. At the time of checkout, the supermarket finance department deducts the commission ratio approved by both parties from the total sales amount of the current period on the monthly payment day, and pays the supplier on time. The difference in exchanges, returns and inventory counts of this joint venture product is due to Suppliers are responsible for this.
4. Classification by procurement contracting method
l Contracted procurement
Buyers and sellers negotiate verbally or over the phone instead of through a contract. Purchases made
l Verbal phone purchases
Both parties borrow letters or telegrams
l Letters and telegram purchases
Both parties borrow letters Procurement behavior based on round-trip or telegram
l Trial control order procurement
When supermarkets do not place large orders due to certain reasons during procurement matters, they will first place trial control orders. The method of placing a small amount of orders and placing large orders only when sales are going well
5. Classification by purchase price method
l Bidding procurement
Supermarkets purchase goods All conditions (such as product name, specifications, quality requirements, quantity, delivery date, payment terms, penalty rules, bidding deposit, bidding qualifications, etc.) are listed in detail and published in the announcement. According to the regulations, the bid opening of the tender procurement requires at least three suppliers to submit quotations before the bid can be opened. After the bid is opened, in principle, the supplier with the lowest quotation will win the bid. However, if the bid price is still below the bottom of the bid, the procurement personnel have the right to declare the bid invalid, or Obtain the consent of the supervisory personnel and deal with it through negotiation
l Inquiry and purchase now
Supermarket purchasing personnel select reliable suppliers, explain the purchasing conditions, and inquire about prices or Send an inquiry form and urge the other party to quote, compare and purchase at the current price.
l Price comparison purchasing
Supermarket purchasers ask several suppliers to provide prices, compare them, and then decide on the supplier to purchase
l Bargaining purchase
After price calculation and counter-offering, supermarket staff and suppliers agree on the price for purchase. Generally speaking, inquiry, price comparison and price negotiation are used in conjunction with the right to use and are rarely carried out separately.
l Open Market Procurement
Open Market Procurement.
Supermarket purchasers make purchases on the fly during public transactions or auctions. Therefore, commodities that are needed in large quantities or whose prices change frequently are often purchased using this method.
3. Steps for purchasing commodities
1 , Select products and suppliers
Select products
l Characteristics of products
l Product planning capabilities
l Operating status and finance Content
l Trademark and publicity capabilities
l Product production capabilities
l Raw material purchase objects (trading companies, wholesale stores)
l Commodity organization and transportation capabilities
l Intelligence collection and analysis capabilities
l Transaction relationships in the circulation industry
l Enterprise scale
Selecting a Supplier
l Reliability. Can the supplier consistently fulfill all written commitments?
l Price versus quality. Who can provide the best products at the lowest prices?
l Order processing time. How long does it take to receive delivery?
l Exclusive rights. Does the supplier grant exclusive distribution rights?
l Services provided. If needed, does the supplier provide transportation, storage and other services?
l information. Does the supplier provide some important product/service data?
l Morality. Does the supplier fulfill all verbal promises?
l Guarantee. Does the supplier guarantee its products?
l Long-term relationships. Is it possible to maintain a long-term relationship with this supplier?
l records. Will the supplier fill out the records quickly?
l Gross profit. Is the gross profit (price difference) enough?
l Innovation. Is the supplier's product innovative or old-fashioned?
l Local advertising. Does the supplier advertise in local media?
l Investment. What is the supplier's total investment cost?
l Risk. How risky is it to engage with a supplier?
Review the supplier's quotation and related documents
l Purchasing personnel review the supplier's quotation. After accepting the supplier's product quotation, they go to the market in person to learn about similar products. Prices are reviewed by comparing them with supplier quotes. This is the so-called "shopping around", choosing the product with the lowest price under the premise of the same quality, similar brand, and good reputation. (The goods being interviewed are in a competitive relationship with those of the supplier; that is, they are of the same type and item, otherwise there will be no comparability)
l Review the supplier’s various certification materials to ensure that each Investigate and evaluate the situation.
2. Negotiate transaction conditions
l Quality: "Good quality is good if it meets the requirements or specifications of the purchase and sale agreement"
l Packaging: The outer packaging is sturdy, and the inner Beautifully packaged goods
l Price: high quality, low price
l Order quantity: When the purchase quantity is small, it should be as general as possible and there is no need to disclose the exact order quantity. When procurement reaches an impasse, you should turn to other projects
l Discounts: Discounts usually include new product introduction discounts, quantity discounts, payment discounts, promotional discounts, no return discounts, seasonal discounts, distribution discounts, etc. kind. Some suppliers may use price-free discounts as the starting point for purchasing. Experienced purchasing personnel will quote various forms of discounts and require suppliers to make concessions
l Number of days to pay: Distributed goods adopt the "on arrival" method. Payment will be made by "##day payment" method. Products sold on consignment and joint ventures are paid in the form of "## days per month"
l Delivery time: The shorter the delivery time, the better. Because the delivery time is short, the frequency of orders will increase, and the quantity ordered will increase. It is relatively reduced, so the pressure on inventory is also greatly reduced, and the demand for other storage space is also relatively reduced.
For order quantities with long-term commitments, purchasing personnel should ask suppliers to deliver goods in batches to reduce inventory pressure
l Delivery conditions: Delivery conditions include: delivery on a specified date and time, free delivery When the goods arrive at the designated location, they are responsible for loading and unloading the goods, placing the product codes neatly on the pallet, and coding the supermarket in-store codes (or printing international barcodes) on the designated packaging positions.
l After-sales service guarantee: Provide free after-sales service for a certain period; and put the warranty card in the packaging box.
l Returns and exchanges: Situations that require returns or exchanges due to supplier product quality problems, damage, etc.
l Promotional activities
n Products on sale In price procurement, purchasing personnel must understand that the general supplier's marketing expense budget usually accounts for 10 to 25% of the turnover. It is not difficult for the supplier to allocate part of this budget for promotion. Generally speaking, suppliers of big brands are willing to reduce prices by 10 to 30% during supermarket news promotions; small brands or unknown brands are willing to reduce prices by 50%. They seek small profits but quick turnover, or promote product visibility. Purchasing personnel should understand the supply price. business needs and purposes.
n There are various promotional activities between supermarkets and suppliers, such as price reductions, floor stacking, end shelves, gifts, draws, theatrical performances, etc. Purchasing personnel should devote 20% of their time to negotiating promotional activities with suppliers to improve each other's sales performance
l Advertising sponsorship: Supermarket purchasing personnel should actively strive for more advertising sponsorship with suppliers. This is also one of the business assessment trademarks for purchasing personnel. The advertising sponsorships referred to by supermarkets include: supermarket news; indoor light boxes; outdoor light boxes or outdoor billboards; floor advertising; shopping cart advertising; shopping agent advertising; TV wall advertising; in-store radio advertising; etc.
l Purchase Reward
n refers to the reward given by the supplier for completing a certain amount of purchase within a period of time. It is usually a conditional or unconditional purchase reward. For example, the current rebates required by supermarkets from suppliers based on the monthly payment amount are unconditional purchase rewards, or "account deductions"; others require supermarkets to return certain rewards only after the purchase amount reaches certain conditions. Conditional rebate.
n You can usually ask the supplier to give a purchase reward of 1 to 10% of the purchase amount. The supplier is happy to provide such a reward due to the demand for sales share. Such incentives will go a long way in increasing supermarket profits.
l Other sponsorship fees: new market opening sponsorship fees, new store sponsorship fees, new product launch fees, centralized display sponsorship fees, anniversary sponsorship fees, various festival sponsorship fees, end-shelf/floor promotion/ Sponsorship fee for floor cage display, etc.
3. Sign the purchase contract
After all transaction conditions are negotiated and the purchasing staff reports to the supermarket purchasing department for approval, the purchase contract can be signed. , the terms are as follows:
l Purchased goods: quality, variety, specifications, packaging
l Purchase quantity: total purchase quantity, purchase batch (the maximum order quantity for a single purchase and Minimum order quantity)
l Delivery: delivery time, frequency, delivery location, maximum and minimum delivery quantities, guarantee period, acceptance method
l Returns: return conditions, Return time, return location, return method, return quantity, return cost allocation
l Promotion: promotion guarantee, promotion organization cooperation, promotion expense commitment
l Price and price discount offer: New Product price discount, single order quantity discount, cumulative purchase quantity discount, year-end commission refund, non-return discount (buyout discount——, early payment discount
l Payment terms: payment term, payment method
p>l After-sales service guarantee: replacement, refund, warranty, installation
l Liability for breach of contract
l Contract change and termination conditions
l Other necessary contract format contents
4. Disposal of goods