## Economic Proof : Slab vs. Bundle Buying

With the laws of Economics, I will prove in this article, once and for all, that buying by the Bundle is mathematically better than buying by the slab. In order to come to this conclusion we need to compare the 15%-25% savings, to the capital needed to stock slabs. If the increased profit produces a higher return than the cost of capital, then stocking bundles is a better business decision than buying slabs as needed.

Buying by the Bundle (wholesale) as opposed to by the slab as needed, is on the conservative end 15% cheaper. Make sure to include deliveries in the math, as moving larger amounts of slabs is cheaper than transporting 1 or 2 slabs.

If you as a fabricator, stock 6 bundles of 5 slabs each, that is a total of 30 Slabs. Bundles of basic materials costs around $2,500 each. This means that you need to invest $15,000, to have a granite inventory. (Everest Gives Net30 trade terms, meaning you don’t pay for your material until 30 days after you receive it. With trade terms there is no immediate investment…)

*30 Slabs = 6 Bundles. 6 Bundles X $2,500 each = $15,000 Investment. *

A small sized fabrication shop can fabricate 20-30+ slabs a month. Larger fabricators are moving 30-300+ slabs a month.

If you fabricate 20 slabs a month, it means that you will rotate your inventory 8 times per year, or about once every six weeks. If you fabricate 30 slabs a month, it will move your inventory 12 times per year, or once every 4 weeks. The below mathematical proof is based on always having $15,000 of material on hand, meaning that you re-buy as soon as you sell.

- 30 Slabs on Hand / 30 slabs fabricated per month = selling all material in a month. This means you move your inventory 12 times per year.
- 30 Slabs on Hand / 20 slabs fabricated per month = selling all material in 6 weeks. This means you move your inventory 8 times per year.

Now let’s move to the next step. If you buy 6 bundles @ $15,000 and you save 15%, you save $2,250 every time you buy your inventory.

0.15 (saving %) X 15,000 (total purchase) = $2,250 (savings) If you sell 20 slabs a month, this means that you save $18,000 per year. If you sell 30 slabs a month, this means that you save $27,000 per year.

- $2,250 (savings) X 8 (yearly inventory turn)= $18,000 (yearly savings).
- $2,250 (savings) X 12 (yearly inventory turns) = $27,000 (yearly savings).

This is the final step in the mathematical proof. Your original investment was $15,000. If you sell 20 slabs a month, your yearly return on investment is 120%. If you sell 30 slabs a month, your yearly return on investment is 180%.

- $18,000 (yearly savings) / $15,000 (Principle Invested) = 1.2 , or 120% ROI.
- $27,000 (yearly savings) / $15,000 (Principle Invested) = 1.8 or 180% ROI.

Above is a mathematical proof, showing that if you save 15% compared to a $15,000 investment, that you are getting between a 120%-180% yearly return on capital. To put this in perspective…

- A Checking account, has a 1.1% yearly return….
- The Stock Market, Has an 8.0% yearly return….

**BUT THIS ISN'T EVEN THE BEST PART **

If you buy by the bundle, save 15%, and use 30 day trade terms, you never need to invest a principle. Your company can literally make 15% more on every sale, if you just buy smarter.

If you are a fabricator, and you have read this article, and you choose still to not buy by the bundle, for at least your basic inventory, you are single handedly sinking your business. I understand that customers will not 100% of the time like what you have and that you sometimes need to special order. However, If done correctly, buying single slabs should only constitute a small portion of your overall purchases. Consignment and slab at a time purchases in a back role context are fine, but when consignment and slab at a time purchases are all you are doing, especially with basic material, it is a problem.