A Bargain that Can Cost You

March 20, 2003

Avoid stockpiling materials at the job site. Purchasing agents will sometimes be offered a great deal by the supplier if they will buy a large quantity of an item. Knowing that a certain job will need these materials eventually, the purchasing agent makes the deal and arranges to have the bulk shipment sent to the job site, satisfied that the company has saved money.

Later, a bulk shipment of materials that will not be needed until two months later in the project arrives at the job site. The materials are placed wherever they fit and there they sit until three weeks later when the general contractor tells your foreman that the materials have to be moved to allow other work to be done. The foreman calls the crew together and they spend half the morning moving materials from one place to another. All of the savings on the price of the materials have now been spent on the extra labor needed to handle the materials. Two weeks later the same thing happens again and the company has lost money on the “great deal” the purchasing agent received.

The purchasing agent could have worked out a deal with the wholesaler to buy the materials and have the wholesaler hold onto them until they were needed on the job site.

Remember that every time one of your employees touches a piece of material, it costs money. Avoid excessive materials handling whenever possible.

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