Saving a Business Through Strategic Purchasing Overhaul

The reorganization led to a reduction of 250 staff hours per month, translating to an annual savings of approximately $75,000, based on the average cost of finance department labor.

Problem/ Challenge

The company faced operational strain due to a broken purchasing process and forecasting model that treated all inventory equally—without accounting for storage costs, capital usage, or market shifts. Poor coordination between purchasing and sales, coupled with an outdated inventory system, led to excessive cash burn, stock mismanagement, and revenue leakage.

Pain Point:

Thanks to the strategic overhaul of our purchasing process, we’ve significantly improved cash flow, reduced waste, and streamlined inventory management. This transformation has not only stabilized our operations but also set us on a path to sustained profitability and growth.

Kate Thomas

Co-Founder

Solutions

Centralized, Real-Time Inventory Dashboard: Introduced a daily-updated, SKU-level tracking sheet linked to warehouse data to ensure purchasing decisions aligned with actual sales trends.
Forensic Accounting & Transaction Audit: Reconciled five years of financial and inventory transactions, uncovering discrepancies and overpayments requiring negotiation and correction.
Inventory System Overhaul with Barcode Scanning: Implemented barcode-based tracking to improve stock accuracy and traceability.
Sales-Purchasing Integration: Synchronized sales and purchasing teams to base procurement on live sales data, reducing planning errors.
Forecasting Model Redesign: Created a smarter purchasing model that considered inventory turnover, cost of capital, and product life cycle risks.

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Results

The restructuring and outsourcing strategy bore immediate and tangible benefits

20% Cash Requirement Reduction

By syncing purchasing more closely with real-time demand, the company lowered excess inventory and reduced over-ordering. This adjustment led to a 20% decrease in cash requirements for day-to-day operations. The freed-up working capital was reinvested into growth initiatives. This move enhanced liquidity and financial agility.

60% Drop in Salvaged Goods

Real-time demand tracking helped the company make smarter purchase decisions, significantly reducing excess and obsolete stock. This led to a 60% reduction in salvaged goods, lowering losses from markdowns or unsellable items. It also cut storage costs and waste. The result: leaner inventory and better ROI on stock investments.

80% Improvement in Stock Management Accuracy

With integrated inventory systems and process automation, the business drastically improved its stock accuracy. Both overstocking and stockouts were minimized, leading to more consistent fulfilment and fewer order issues. Accuracy in inventory tracking improved by 80%, enabling better cash flow, planning, and customer satisfaction.

Profitability Increased from 8% to 11.6%

Operational improvements—especially in forecasting, purchasing, and inventory turnover—had a direct impact on profitability. Profit margins increased from 8% to 11.6%, reflecting a 3.6% gain. These efficiency gains not only reduced costs but also enhanced the company’s ability to scale profitably.

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