Modern industry depends on a dizzying array of commodity chemicals to function. Many factories would shut down within a few weeks if their supply was to be cut off, and the cost of purchasing those chemicals can be a major part of a company’s expenses. Since these chemicals are so important, many companies choose to purchase them in bulk. There are plenty of good reasons to do so, ranging from the security that comes with a regular supply to reducing the cost of shipping. Taking advantage of those benefits can lead to significant savings for a manufacturer, which is leading more and more of them to do so every day.
1- Avoiding Losses
Time is money. A factory that is not producing any products is losing money for its owners. This is especially true for any factories that deal with a large number of chemicals, since they tend to include complicated pieces of equipment with relatively high maintenance costs. There are plenty of unfortunate events that could cause a factory to shut down, but the increasing complexity of supply chains means that their disruption can be a serious risk to modern businesses. Something as simple as a traffic accident that causes a chemical spill could lead to a significant problem, so every business needs to plan around the risk.
There are plenty of ways to deal with that problem, such as maintaining links to backup suppliers, but the oldest and most effective method is to keep a large supply of chemicals in stock. Doing so does incur some storage costs, but they tend to be low compared to the losses incurred by shutting down a factory. Managers need to strike a balance between keeping storage costs low and keeping a safe supply, usually by only stockpiling the chemicals which are most likely to run into supply problems. This is a delicate task, and getting it right is the mark of an expert.
2- Bulk Pricing
Bulk chemical purchases can also lead to significant discounts. Many manufacturers will offer direct price reductions for clients who buy chemicals in large quantities, especially those who do so regularly. These savings can be sufficient to justify a bulk purchase on their own by making up for the cost of storing the chemicals, but they are far from the only way to save money from this sort of purchase.
It can be difficult to transport chemicals safely, which means that doing so can be expensive. The costs increase if the shipment needs to cross over a border, since many countries have very stringent restrictions on importing chemicals. According to RightPath Industries, organizing safe transportation and meeting legal requirements for several small shipments is usually more expensive than handling those problems for a single large shipment. Small shipments can also mean leaving empty space in a tanker ship or truck, which wastes even more money. As such, shipping large batches of chemicals is usually more efficient than shipping small ones. As the difficulty of shipping a specific chemical increases, so will the savings that come from shipping it in bulk.
3- Saving Labor
All of the difficulties associated with buying, shipping, and storing chemicals can lead to a significant amount of paperwork. Handling that paperwork often involves a great deal of time and effort, usually from a relatively skilled manager. The workload will only increase if there are any unexpected problems with a shipment. The cost of that labor adds up quite quickly.
It’s possible to reduce the administrative costs associated with a chemical supply through automated clerical software, but it is impossible to completely remove the need for a human touch. Buying chemicals in bulk reduces the number of shipments that clerical workers need to track, so it will save a significant amount of labor. Since there are fewer transactions, it will also reduce the probability of any mistakes being made, which means less labor will be wasted to fix errors.
Every chemical order will also require processing when it arrives. The chemicals must be directed to the right storage area and safely transferred to their new home until they are needed. That needs to be done with care to avoid accidents, so workers can spend a significant amount of time handling it. Larger orders mean that it needs to be done less often, which will save even more labor in the long run. These savings are individually small, but they do add up over time, and there’s no better way for a business to save money than to cut many small expenses at once.