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Centralized purchasing: Taking business operations to a new level of efficiency

By Jessica Chase

Having centralized records of all purchases improves a pool and hot tub company’s financial analysis and review of pricing practices and quoting.

In today’s highly competitive marketplace, centralized purchasing has become integral to business success. It eliminates redundant and duplicated efforts and creates opportunities for combining departmental purchases to qualify for volume discounts and decreased/eliminated shipping costs. Centralized purchasing also makes it easier to create and maintain good relationships with vendors and suppliers. Volume purchasing means better prices, greater discounts, and more agreeable terms can be obtained. Further, volume deliveries also help to cut down on staffing costs involved to move and store goods. Fortunately, the technology incorporated into today’s business software allows pool and hot tub retailers to automate much of this work as well as integrate these purchasing systems with accounting and stock control, making centralized purchasing key for specialized retailers to compete against big-box stores.

Patio Pools & Spas, a specialty retailer based in Arizona, implemented a centralized purchasing system using this technology. The company has five retail locations and a full-service department comprising a fleet of more than 30 service trucks to maintain 700 pools per week, plus a residential and commercial construction department. Not only did this technology help to improve Patio Pools & Spas’ bottom line, it also enabled the company to grow and thrive in this competitive niche market. In fact, the centralized purchasing tools that are now available have become the company’s backbone in its ability to offer its customers better service.

Each department and store is managed and operated differently—as business would dictate. However, every department uses the same products and parts—from the retail stores, service technicians, and construction crews. For instance, the company’s retail stores sell filters, the service technicians sell, install, and clean filters, while the construction department installs and replaces filters. That said, before centralized purchasing, it was a struggle to get an accurate understanding of the company’s product inventory and purchasing needs amongst the different locations throughout the system. However, once the automated purchasing and inventory control system was established, the company has since become an efficient buyer—not only by lowering inventory and carrying costs, but also by enabling the company to offer better customer service across all aspects of the business.

As the company is diverse, it was essential to set-up one warehouse to handle purchasing for all locations—making it truly, centralized purchasing. Prior to having this central warehouse, each location ordered its own supplies, which became a nightmare to track and control costs. The system now shows the central warehouse, each of the five retail store locations, as well as the service truck fleet, which are classified as ‘rolling warehouses’ in the system.

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