Raw materials contribute a huge part in the pricing and profitability of a manufacturing company’s goods. The cheaper the raw materials, the more leeway you have in adjusting your price for profitability and competitiveness. As such, we’ll be taking a look at different ways for you to get cheaper raw materials, or at least lower your raw material costs.
#1 Negotiate and Get Quotes from Different Suppliers
One of the easiest ways you can lower your raw material cost is by negotiating a better deal with your current suppliers.
Similarly, you can also try to ask for discounts, freebies, or even ask them to cover the cost of freight — any reduction can go a long way to lowering your raw material costs. It’s also recommended that you get quotes from other suppliers to check if they can provide the raw materials you need at lower rates, and you can use this information as leverage when negotiating, as well.
#2 Buy Through A Sourcing Agent
Sourcing agents specialize in searching for raw materials in countries that sell them at relatively lower rates. A lot of big companies hire them for competitive advantage and to ensure a constant supply of raw materials, but even smaller companies can still take advantage of services that sourcing agents offer to get raw materials at lower prices. Just make sure that you provide them with the proper specifications and requirements so that the raw materials they’ll look for and acquire will suit your standards.
#3 Buy Through Liquidators
Companies that are shutting down operations and do not need their raw materials, and companies that end up making more raw materials (and even parts) than they need that they need often sell their surplus raw inventory. Luckily, they sell these inventory at significantly cheaper rates and often through liquidators and surplus selling platforms. So, if you’re looking for a particular raw material or product component at a lower price, try your luck with companies such as Spring and Wire Liquidators that buy and sell surplus compression springs and coils, or other similar companies that sell the specific raw material that your business utilizes.
#4 Find Alternative Materials
You can also consider looking for cheaper alternative raw materials that you can swap with your current raw materials. Just make sure that this doesn’t affect or lower the quality and features of your products.
Bonus: Optimize or Upgrade Your Production Process
If you’re unable to find a way to get cheaper raw materials, then it may be time to revisit your manufacturing process and implement “lean manufacturing.” Lean manufacturing is a practice that originated in the Japanese manufacturing industry, wherein the company focuses on minimizing the amount of waste produced without sacrificing productivity as well as the finished products’ quality and quantity. You’ll need to find a way to optimize it to utilize lesser raw materials and produce less waste (which also helps you save money in terms of waste management) through making changes in your process or adopting new techniques or technology.
Manufacturing companies need to find cheaper raw material supplies and suppliers to increase their profitability and to offer their goods at competitive rates. But regardless of which way or method you’ll be choosing to get cheaper raw materials, always make sure that you don’t compromise on the quality of your raw materials as it would impact the quality of your finished products.