Globalisation has changed the playing field for businesses, in particular manufacturing companies. There is the opportunity to reach customers in foreign markets and supplier relationships are now on a global scale.
However, this brings with it the added risk of external factors such as natural disasters, political instability and currency fluctuations.
Now, more than ever, businesses are sourcing multiple suppliers for the same products/raw materials. This reduces the reliance on one or a few suppliers but it introduces the complexity of managing a diverse supply chain.
Here are some things to consider when dealing with multiple suppliers:
With shipments coming from all over the world, there is a vast range of delivery times and associated costs for each product from each supplier. For example, Supplier A in China may be able to deliver Product A within three weeks but Product B may take six weeks to arrive from the same supplier. Knowing and managing this information is crucial to a business’ purchasing efficiency and stock management.
If the quality of goods from each supplier is equal, the most important considerations thereafter are price and lead time, depending on the urgency of the customer.
If suppliers know that they do not have exclusive contracts with a business, this may motivate them to offer quality goods at competitive prices. They may even engage in ‘price matching’ with the other supplier(s).
A supplier’s order turnaround time may be its unique selling point and therefore allow it to charge more than its competitors.
A supplier’s capacity to deliver large orders may be a deciding factor in choosing a provider. If a business gets a large customer order, it needs to be sure it can deliver it in the timeframe quoted. It is important to know the scale and size of suppliers’ operations. (If however, each individual supplier of the same item cannot meet demand, this is where it is beneficial to have multiple suppliers.)
Purchasing departments must consider all of these factors before placing an order with a supplier. An automated approach is the most time-efficient method of doing this. Flowlens provides detailed sales information about the quantity of materials required and the timeframe allowed for production. This automatically calculates the delivery time afforded and in turn, selects the most relevant, cost effective supplier to order from.
If you are currently struggling with managing multiple suppliers, Flowlens can help your business.
We’ve combined the most popular features of our Sales and Operations modules to create a starter solution for businesses taking the first step to creating a more efficient Sales Ordering, Stock Management and Purchase Ordering process.
Our manufacturing software is cloud-based, so you are assured of reliability and availability across devices, with no hardware upgrade costs, or expensive per-user licensing.
An effective stock management process is one of the key components of a company’s purchasing efficiencies. Stock is large capital investment so it makes sense to manage it as well as possible.
In particular, keeping track of raw materials is essential for the smooth flow of the production process. Internal controls to prevent loss, damage and misuse of stock must be established and maintained.
Depending on the type of business, these internal controls include:
Secure the Warehouse
Locked gates and doors with only authorised entry is the first step to securing the stock.
Organise the Stock
If you can’t find it, you can’t control it! Each stock item should be numbered as well as the location that it is stored in. This facilitates quick and easy tracking in the long run.
Count all Deliveries
Do not rely on delivery dockets. Identify who is responsible for signing off on the quantity received before it is officially recorded as ‘in stock’. If there are items missing or damages, this needs to be noted immediately and appropriate action taken, (accounts department notified, goods returned, etc.) Using an automated handheld scanner is the most error-free method of stock recording.
Tag all Materials
Each item should be identified by part number and description to avoid any confusion or the wrong part being used for the wrong production.
Standardise the Picking Process
Whether it is a manual or automated procedure, when any item leaves the warehouse for use in production, servicing, or otherwise, it must be recorded. A controlled gate or door is extremely beneficial for this step.
Check the Bill of Materials (BOM)
The BOM is a list of the parts needed for production and it is used to pick materials from stock. Ensure that your BOM software is reliable as this will save messy additional requests and returns at a later date.
Conduct Spot Checks
Compare small, frequent, manual counts of the warehouse stock with the recorded amounts and investigate any errors found.
Record all Wastage
If scrap materials are thrown away without being properly recorded, the stock management and accounting systems will assume that they are still in stock and quantities and values will be inaccurate. Create a procedure to record wastage regularly.
Download our ebook to learn some of the other best practices for better stock management, involving all relevant departments in the process.
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:
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.
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.
Manual integration of sales quotations/orders, purchase orders and stock management can result in unstructured data and insufficient business reports.
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.