If your construction business is willing to pay upfront for long-term gains, buying in bulk could be a viable strategy—so long as you have a plan. High volume purchases are most advantageous to contractors with multiple ongoing projects that have the same product requirements, says Michael Bellaman, president-CEO of Associated Builders and Contractors Inc. “If you’re committed to those jobs and to getting paid for those jobs, then it makes more sense to buy in bulk,” he says.
For bulk purchases to pay off, it’s also important that contractors have a voice in design. “You need to have an opportunity to influence specifications so that what you’re buying in bulk is actually going to be required across multiple projects,” Bellaman says.
Avoiding bulk purchases of anything unique also helps ensure your inventory won’t go to waste. “Buy the materials that start the job like your concrete, framing materials, siding or drywall because you use a lot of that,” says Michael Hydeck, owner of Hydeck Design Build Inc. in Telford, Pennsylvania, and past president and national chairman of the National Association of the Remodeling Industry.
When contractors do have an influence over design and have nice backlogs, then bulk purchases are a way to save big in the long run. Here are four ways buying in bulk can help your business gain time, save money and set your business apart from the competition.
1. More money in your pocket
Saving the maximum amount of dollars is often top of mind for businesses, and bulk purchases are one way to do it. “Buying in bulk is absolutely a strategy,” Bellaman says. “If you can take advantage of a scale purchase, you could lower your cost of business—as long as you consider the cost of storing inventory.” But even though saving money is a major advantage for any business, the benefits of buying in bulk extend beyond the financial.
2. Waste fewer man-hours
Bulk purchases can also minimize the number of hours workers wait for materials to arrive to the jobsite, Hydeck says. When you don’t have all the necessary materials on site before you start a job, you need to send somebody to the store a few times a week, load the materials up and drive back, which wastes not only the drivers’ time, but also the hours of those waiting back at the jobsite. “If a contractor buys in bulk, he would probably finish the job faster than the guy who doesn’t,” Hydeck says. “He would have more time to work with the material on hand because he’s not sending someone back-and-forth.”
3. Maintain consistency across jobs
For some in the construction business, consistency is key. When it comes to the look and feel of jobs, bulk purchases are one way to guarantee this consistency. “Take natural stone as an example,” Bellaman says. “If you’re buying one bulk purchase of a natural stone and you’re buying it out of a particular quarry, your product is going to be much more consistent than if you bought natural stone from multiple quarries.”
4. Finish jobs on or ahead of schedule
With buying in bulk also comes availability of materials. “You already have the materials so you don’t have a lead time issue,” Bellaman says. “You have the reliability of having inventory there for the work that you have.”
If a client expects you to complete the job within a certain timeframe, it’s important to eliminate factors that could cause a job to run behind schedule, like late deliveries. “If you told the client you were going to be done in [20 days] and now you’re not done by day 30, you’re now getting an aggravated client who’s not going to recommend you,” Hydeck says. On the other hand, when you do complete jobs on or ahead of schedule, it’s more likely that clients will recommend you and return to your business for future jobs.
With a little planning and consideration of your pipeline before you make a purchase, buying in bulk can help you save money in the long run and build a positive reputation for your business.