Wednesday, April 01, 2009

Trading – Centralized Purchasing

All calculations are for demonstration only. They are not based on real business transactions.

Previously on our family trading activities, this blog has mentioned on capital acquisition which are Pooled Capital and Family Borrowings. Starting Year 2005, the business went parabolic in numbers of shops due to many other business strategies.

Centralized Purchasing

Basically, us acehnese traders are individualistic type in a sense that we don’t like to work under other people or we prefer to be our own bosses.

Acehnese farmers however have been applying collectivism where they work collectively for good yield which benefits them as a whole. Acehnese traders however do not apply collectivism but we do apply what is known as Corporative Individualism. This is a strategy where shop owners work collectively for the benefit of every shop owner.

To demonstrate what Centralized Purchasing means is as follows:

1) Say an average shop sells 10 tanks of cooking gas a day.

2) In a month, the shop sells 300 tanks of cooking gas which means the owner have to buy 300 tanks for the sales.

3)Say for every 100 tanks purchased, a shop owner received a tank for free. This means, for 300 tanks purchased, a shop owner received 3 tanks for free.

4) Say there are 100 shop owners. Therefore 30,000 tanks are purchased monthly. Also, 300 tanks are received for free.

5) That free 300 tanks then means the family as a whole has grown 1% in inventory which are sold to a new shop owner with handsome profits.

Note: Shop owners lose the free tanks but gain profits from the sales to the new shop owner.

Centralized Purchasing however does not directly involve in the family business growth … however …

There are two major advantages in Centralized Purchasing:
1) Having the power for business merger or acquisition being the distributor of a product.

2) Having the business benefit called One-Month Credit.

Having the ability to purchase 30,000 tanks monthly is huge. Once we are a big buyer, we can force the distributor to accept us as business partner or face the consequence of losing us as buyers. This allows us to move upstream from running sundry shops and become distributors/wholesalers. We do this all the time to many products.

This blog will mention The One-Month Credit which is major to our business growth. Some other time … God’s willing.

Ringtones by Azer Mantessa

Okay, five more ringtones for everyone to choose from:

Ringtone: Azer Reggae

Ringtone: Azer Blues 2

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Ringtone: Azer Blues

Ringtone: Azer Pop 2