Every business needs supplies, whether it be day-to-day necessities like photocopier paper or materials for manufacturing car parts.
Ensuring that the key components that a business relies on are available when needed is the responsibility of the Purchasing Department. Businesses strive for ‘purchasing efficiency’, whereby materials purchased meet required quality standards at competitive prices.
In the long term, purchasing efficiencies can help an organisation to make considerable financial savings, while protecting goodwill by meeting orders on time.
The effectiveness of the Purchasing Department largely depends on accurate data sharing between many other business functions. Many businesses use a mixture of spreadsheets, databases, accounting packages and other various software applications to manage sales, purchasing, stock and production. This is usually fragmented and cumbersome and fails to provide an integrated real-time overview of what’s going on in the business.
The existence of disparate systems and manual procedures often leads to data duplication and/or gaps. There is potential for human error and the time taken to generate worthwhile reports could be much better spent doing higher value tasks.
Some areas where businesses encounter problems when managing their sales, stock and purchasing include:
- Quotes and Sales Orders
Sales quotations and orders are often stored in emails, spreadsheets and standalone CRM systems. Forecasting sales is not easily achieved with accuracy and therefore production scheduling and stock purchasing are not as efficient as they could be.
- Minimum Stock Thresholds
Businesses with no automation of minimum stock alerts can expect to run out of materials for production without warning, resulting in delays and associated costs.
- Sourcing Supplier Quotations
Lack of notice means that purchasing departments may not be getting the best deals as they don’t have time to get multiple quotes from suppliers.
- Receiving and Allocating Stock
Opportunities for discrepancies occur mainly at the inward delivery and production stages, as well as a result of breakages, loss and theft.
- Unstructured Data
Manual integration of sales quotations/orders, purchase orders and stock management can result in unstructured data and insufficient business reports.
- Too Many Spreadsheets
Using spreadsheets to track and manage stock is laborious and can often result in inaccurate stock level reporting as manual updates get delayed, missed or carried out incorrectly.
Failing to forecast demand efficiently is one of the main contributors to inadequate stock management. Without a clear view of the sales pipeline, businesses may have too much, or too few materials for production demand.
In our ebook, ‘6 Stock Strategies to Increase Your Profits’, we look at how to avoid:
- Insufficient Stock
- Rush Orders
Download this ebook to learn some of the best practices for achieving purchasing efficiencies through better stock management, involving all relevant departments in the process.