Maybe you think that fixing purchasing targets by item is a time-consuming task for nothing, I already wrote a post about the benefits, but now I would like discuss this point in relation with budget construction.
In my opinion, defining Purchasing Targets by Item is the best way to build your purchasing budget. This budget will be realistic and transparent, and will constitute a valuable tool.
Think about how your purchasing budget is built today. I am sure that you are using a 'top-down approach', considering last year’s expenses, the news from the market and expectations from your marketing and sales staff. With this kind of 'top-down approach, nobody knows what is behind the figures at the end of the day, or at me middle of the year.
I am proposing a bottom-up approach where the final result is the consolidation of all the needs and targets item by item.
Let's see how to build your budget with your purchasing targets.