Procurement management can help a company save on costs and improve deliveries. It is a business area that too often does not receive the management attention or technology resources it should. Perhaps this is because all businesses need to purchase both goods and services to operate, so it becomes regarded as a standard function that can just run without much supervision, unlike the more exciting areas of product development and marketing.
Yet, a useful procurement function can have a significant positive effect on your business operations. In many businesses, a large portion of their overall costs can come from things that are purchased. Not only is the price you pay vendors important, but choosing the best vendors and tracking their performance is also critical.
Purchasing activities can get quite complicated, and keeping track of what is happening can become a big challenge. Often, the purchasing department gets caught in the middle with pressure from both the company’s internal employees and their outside vendors. The manufacturing department will want faster deliveries of their required components with higher quality and lower vendors’ prices. And all the other departments that purchase items, whether they be goods or services, need their orders cost-effectively fulfilled promptly to accomplish their tasks.
Without a sound procurement system, it is next to impossible to achieve good results. For example, say there are multiple potential vendors for a particular item. A purchasing professional does not have a quick and easy way of tracking the historical performance of those vendors. They may give the order to the first vendor they see on the list. You rely on pure luck that the procurement agent can optimize price, quality, and delivery performance without an automated process.
A reliable procurement module inside of a cloud-based Enterprise Resource Planning (ERP) software system can provide many benefits. It can offer a purchasing history and instantaneously show the vendor, the previous price paid, and vendor delivery performance from past purchase orders. This real-time information can put the purchaser in a better position to select a vendor for the next PO. Also, it can be invaluable when a purchaser is negotiating a price with the vendor. Not only can they see price history from the vendor they are talking to, but they can also see any price history from the vendor’s competitors.
Next, a procurement module also allows a purchasing agent to plan their purchases and automatically track their status so the agent can advise others when the requested items will be delivered. They also have greater visibility when delays occur and can then begin the contingency planning process as soon as possible. The procurement module connects to a Material Requirements Planning (MRP) module in the ERP system, which means that a company can achieve more automation in determining what items need to be purchased and when they need to be delivered to keep the manufacturing operation running smoothly.
Some purchases may require management approval, especially for high dollar-level purchases. Another advantage a sound procurement system can provide is an automated purchasing requisition and approval process. Instead of paperwork being passed back and forth between different departments and company management, these approvals get sent electronically, saving time and money and providing a useful log of who approved a particular purchase and when they did it.
If you would like to understand how your procurement function could operate more efficiently and effectively, talk to My Office Apps. We have business specialists available to evaluate your business and find ways to minimize the costs and maximize the benefits with our cloud-based Kechie ERP software system. Folks on our team understand the needs of the procurement department and have been implementing integrated ERP systems for many years under all sorts of different situations. We have been in your shoes, and we can leverage our experience to show you how much of a difference a reliable procurement module in an ERP system can make in your operations.
For more information and advice on how to upgrade your management software without it being a significant pain, visit www.kechie.com or www.myofficeapps.com. Or better yet, call us at (714) 486-1487 and ask to schedule a demo to show how we can help solve the business issues you face, both today and tomorrow.