Procurement department inspection: Is your employee overpaying?
Most small business owners in Wrocław firmly believe that their people care about the company's cash as if it were their own. Reality comes to light only when we put facts on the table and check the last 83 invoices from regular suppliers. Usually, it turns out you're overpaying for your employee's peace of mind, not for the goods.
The trap of old acquaintances and convenience
In small and medium-sized companies, purchases are often based on relationships that have lasted for 6 or 8 years. Mr. Marek from the procurement department calls Mr. Darek from the warehouse because they've known each other since they both worked at another plant in Psie Pole. This seems safe, but for the company owner, it means real losses. We look for gaps in everything and usually find them in exactly such arrangements. The employee doesn't look for savings because they would have to make three extra calls and spend 37 minutes comparing prices. They prefer to order where they always have, even if the price is 14% higher than the competitor around the corner.
During one of our recent analyses at a manufacturing company near Wrocław, we discovered that they were paying 4,200 PLN more per month for standard machine coolants than the market average. Why? Because the supplier brought coffee and calendars to the office once a quarter. The employee felt obligated, and the boss paid for it out of his own pocket. No fluff: such situations are standard in 7 out of 10 companies we visit. People choose the path of least resistance, and you lose money that could go toward bonuses or new workshop equipment.
The rules are simple: sentiment in business is expensive. If your employee isn't mandated to verify prices at least twice a year, I guarantee you're overpaying. It's not about changing suppliers every week and creating chaos in the paperwork. It's about making the supplier feel the breath of competition on their neck. One simple conversation and showing that we know how much a given item costs in three other places is enough. Often, it suddenly turns out that the 'old friend' can drop the price by 8% within five minutes of a phone call.
Your employee's convenience is often the most hidden and painful cost in your entire business.
A simple three-offer mechanism
Introducing purchasing controls doesn't have to mean buying expensive software for tens of thousands of zlotys. At Reformacja Biznesu Sp. z o.o., we always say: net profit counts, not expensive management toys. A simple spreadsheet is enough, where for every order over 1,500 PLN, the employee must enter prices from three different suppliers. This takes them an extra 18 minutes of work but allows you to sleep peacefully. If the difference between the cheapest and the selected offer is more than 4%, the employee must add a short justification as to why they want to buy more expensively despite the difference.
We recently introduced such a system in a construction wholesaler struggling with low margins. After 4 months of applying the three-offer rule, operating costs fell by 9.2%. It suddenly turned out that packaging materials could be bought in Legnica for 320 PLN less per pallet, and transport didn't have to cost as much as the warehouseman's brother-in-law asked for. Employees initially complained it was bureaucracy, but when they saw that thanks to the savings, the company bought a new forklift that made their work easier, the complaining stopped.
It is important that these comparisons are real. Sometimes employees fake RFQs by calling companies they know are expensive. That's why every now and then we do a 'control inspection'. We select 5 random items from the last month's purchases and check the prices ourselves in 12 minutes over the phone. If we find a difference larger than 15% without a sensible reason, we sit down at the table with the employee and explain the rules of the game. Facts on the table: either you care about the company's money, or you look for a new job.
When does saving become a risk?
We look for gaps in everything, but we are not naive. The cheapest offer is not always the best. If a supplier from the other end of Poland offers goods 3% cheaper, but the delivery time is 11 days instead of 2, it's not worth it. Production downtime costs significantly more than those few zlotys saved on material. Therefore, in our purchasing procedures, we always include a reliability parameter. We score suppliers for punctuality and quality. If someone is late with transport 3 times in six months, they are off the list, even if they have the lowest prices in Lower Silesia.
In one of the Wrocław printing houses we worked with, the boss pushed so hard on the price of paper that employees started buying the lowest-grade stock. The result? Machines jammed every 4 hours, and the service technician issued a bill for 3,800 PLN for print head repairs. This is a classic example where a lack of fluff from an advisor would have been useful. We went in and said directly: you saved 1,200 PLN on paper to lose almost 4,000 on repairs and miss deadlines for 12 key clients. This isn't business; it's sabotage.
That's why we teach owners how to balance price and quality. A good purchasing procedure is one that allows an employee to make a decision independently, but within defined frames. If the item is critical for production, price has a weight of 60%, and delivery time 40%. If it's office supplies, price is 94% of success. We have used this approach at Reformacja Biznesu Sp. z o.o. from the very beginning, since 2017. Thanks to this, our clients not only save but also don't lose their nerves correcting mistakes after cheap suppliers.
The lowest price on an invoice is often the beginning of the most expensive service problems.
How to start cleaning up expenses?
Start by reviewing bank statements from the last 3 months. Select the 14 largest transfers to regular suppliers who are not utilities or landlords. This is your strike group. Take the phone and spend 2 hours on Thursday morning checking if you can buy the same things cheaper elsewhere. You don't have to change everything at once. The mere fact that you walk through the office and ask: 'Why are we paying 83 zlotys for this box when I see it online for 64?', sends a clear signal to the team. The boss is looking at the numbers.
Next, set a limit. Any purchase over 800 PLN must be approved by you or a person you trust 99.1%, based on the previously mentioned three offers. You'll see how suddenly the number of 'urgent and essential' purchases drops by about 23%. People will start wondering if they really need that specific tool model or if something cheaper will suffice. This isn't stinginess; it's the hygiene of running a company. In a small business, every zloty saved from being thrown down the drain is net profit at the end of the year.
If you don't have time for this because deadlines and clients are chasing you, we can do it for you. Our team, consisting of 6 analysts, enters the company, does a purchasing audit in 5 business days, and shows in black and white where the cash is leaking. We don't promise miracles; we promise numbers. Usually, after our intervention, we manage to recover from 3,000 to 15,000 PLN per month that previously dissolved in uncontrolled orders. The rules are simple: you run the business, we make sure you don't overpay for the fuel for that engine.
