When you source your wheel hubs, the payment methods, supply channels, and inventory management systems you use directly affect your bottom-line profit. That means you need to optimize these variables to reduce your costs. Consider these four tips for purchasing wheel hubs, and source OE-quality parts the right way.
Pay Within the Discount Period
Wheel hub suppliers often offer a discount if you pay your invoice within a certain period of time -- usually within 30 days. For example, if the terms of your purchase agreement are 2/10 net 30, you can earn a 2% discount when you pay your bill within the first 10 days after your purchase. (The net of your invoice is due within 30 days if you do not pay within the discount period.) Although 2% may not seem like a lot, it can add up over a year depending on the size of your orders. Most of the time, it makes sense to earn any discount.
Pay Using the Right Method
When it comes to paying an invoice, you have many options. Your choice -- whether a merchant cash advance, trade credit, business credit card, or a check -- depends on your finances and cash flow. Work with your financial advisor or CFO to determine the payment method that best meets your needs. If cash is tight, you can always use a check and leverage the float. Float is the amount of time between when you send your check and when the funds are actually deposited in the bank. While electronic funds transfers are eliminating float periods, using paper checks still allows you to gain a few extra days before funds are withdrawn from your account.
Use OE-Quality Vendors
In the world of auto parts, not all wheel hub assemblies are created equally. A lot of low-end, poorly manufactured units on the market will cause you and your customers headaches. That’s why it’s worth screening your vendors thoroughly to optimize your supply chain and purchase quality parts. Look for suppliers of OE-quality parts who offer warranties on the units they sell, along with customer support and shipping discounts. If you are selective with your business partners and the agreements you sign, it can raise your profit margins and allow you to grow your business.
For example, BCA tapered bearings can handle heavy-duty shock loads, because they are made from case carburized steel. This metal also extends the useful life of the bearings. This type of quality and precision engineering is only available via exclusive vendors. This makes it important to screen vendors to get these parts into your inventory, especially when customer demand is high.
Use Just-in-Time (JIT) Inventory
There is no reason to purchase more inventory than you really need, and tying up precious funds that can be used as working capital. Rather, it’s best to keep just enough wheel hubs and parts inventory on-hand to meet your immediate needs. When using Just-in-Time inventory, you’re balancing your purchases and inventory levels to meet demand, while optimizing your financial position. Once you perfect this system, it can save you a lot of money.
When you purchase wheel hubs, you have many factors to consider. By using the right payment methods, suppliers and inventory management techniques, you can purchase wheel hubs the right way.