Sabre Limited has worked with a lot of companies that manage their purchasing in a variety of ways. It’s always part of any ERP project to help them improve purchasing management practices, and in particular improve their efficiency and accuracy. This is a major part of any ERP implementation in manufacturing businesses.
Often their existing processes are highly variable and sometimes manual.
Perhaps they go out to the stockroom and see what looks like it is running low. Or they keep a running total of inventory on paper or Excel sheets. Maybe the process is to purchase when things are below their minimums. Maybe they study drawings and purchase all requirements all at once. Maybe they just keep Microsoft Word templates of the things they use the most and send them out regularly. Some will utilize their accounting system. Many will live and die by Excel sheets.
Replacing these during the ERP implementation in manufacturing facilities is one of the ways companies can gain immense benefits.
Why do you want an ERP implementation in manufacturing to be so focused on Purchasing?
To understand the reason you want to focus on your purchasing department in any ERP implementation in manufacturing, it's important to understand the problems with a more manual "pre-ERP" purchasing process. Many of these challenges are described in our companion blog, 6 Signs you need Business Central Inventory Control.
- Manual work or duplication of effort occurs when typing a purchase order into Excel or Word and then emailing or faxing.
- There are no reports or alerts advising you when to buy or when something is going to be late. You end up becoming an email manager or tracking lots of paper.
- You are likely dealing with inaccurate inventory levels. This makes it very difficult to improve purchasing management. Manual systems are ripe for errors. And some accounting systems don’t (or weren’t implemented to handle) automatically bring in the inventory transactions from purchasing or jobs while many don’t provide access to the system to Purchasing or Inventory Control.
- Inventory shortages will inevitably occur affecting the timing of your deliveries and ultimately your customer service reputation.
- Short lead time items and long lead time items will get purchased at the same time tying up cash flow before it is necessary.
- You will not have visibility across all your jobs or projects. Yes, many specialty items must be purchased to the job but there are many others that are common to other jobs and you are not getting the benefit of volume purchasing by buying all from drawings or bills of material.
- You may have people (Engineering, Accounting, Sales, or Administration) doing the purchasing for you. When purchasing is not their primary role, improve purchasing management suffers. When staff lack proper tools and/or do not have a negotiation or a supply chain background, you are not always getting the best bang for your buck.
Your ERP Implementation in manufacturing - especially with a product like Microsoft Dynamics 365 Business Central is going to address these problems. Too many businesses try and focus on the more exciting features like a Warehouse Management System or WMS, driven by wireless barcode devices. These are exciting and "sexy" products, but in reality some very simple changes to purchasing can make even bigger differences, at much lower prices.
Dynamics Business Central as a product used for an ERP implementation in manufacturing addresses all of these issues.
With a proper ERP system in place, purchasing can then be delegated to one person with responsibility for that area who becomes fantastically more productive. They can purchase to the job or to inventory without double entry – just click and the P.O. is created and sent (with or without approval rules based on dollars and security).
The system will know which vendors are associated with that part, what the costs and volume levels for pricing are, what the lead times are etc... Using this data (along with things like minimum and maximum and alternative parts for stocking) lets you see when the inventory is required based on the schedule for manufacturing and customer delivery due dates. Your purchaser will be fully aware of when a P.O. is going to be late, have the tools for easy follow up, and can evaluate the performance of your vendors when dealing with your business.
The ROI on ERP implementation in manufacturing for purchasing management is high. Improve profits and cash flow with this invaluable tool for your business.
Need Some Help?
If you need help with purchase control, give us a call at: (519) 585-7524 x.45 or contact our team, we are excited to talk with you soon!