If you have a Costco or Sam’s Club card, you know there’s value in finding the best price or buying in bulk. So, why shouldn’t CMC apply that same concept to materials and appliances we need to service the utility programs we support?
That’s exactly what CMC is doing now with a procurement project that could lead to big savings—and increased profitability for the company.
“Our preliminary estimate is that the company could save around $1 million annually by effectively managing our materials purchases,” said Lisa Stotts, chief financial officer. “That estimate is based on a request for proposals (RFPs) we sent to 30 suppliers.”
We received responses from half of the vendors with their proposed pricing.
“CMC typically buys hundreds of air conditioners, refrigerators and air purifiers throughout the year from stores like Lowes and Home Depot in the respective states we work in,” Stotts said. “There’s often a markup on those items that we have to pay. If we can consolidate those purchases, we will get better pricing.”
Now, think about the possibilities of the savings that can be realized when you consider the hundreds of items we buy to complete our work. Everything from faucet aerators to pipe insulation to efficient light bulbs will lead to cash savings for CMC.
Several issues still need to be addressed before CMC can realize all of the savings. For example, the timing of installing the existing stock of items currently in CMC warehouses. Can we coordinate purchases across several states to maximize savings? What’s the best internal process to secure the materials each office needs? Can we efficiently purchase items in bulk once a month rather than on a daily or weekly basis? Do we need a centralized inventory manager to oversee the process?
“There still are a lot of questions that need to be answered, but this initiative could provide substantial savings to CMC,” Stotts said. “The more materials we can include in the purchasing process, the more we can save. It’s a matter of economies of scale. The bottom line is that we could possibly add $1 million back to the company.”