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Improving Procurement Management for Manufacturers

Improving Procurement Management for Manufacturers

Manufacturers come in all shapes and sizes, which also means their approach to procurement and purchase order management can vary significantly. An excellent procurement process aims to ensure that the correct stock is available at the right time, and at the best price to prevent disruption to the manufacturing process.

There are a few points to consider if you’re looking to improve the accuracy of your procurement process:

Information

Access to real-time, reliable data is paramount to increasing the accuracy of procurement planning. Often SMEs rely on a disconnected network of Excel worksheets throughout the organisation in an attempt to collate information between staff and departments which can lead to miscommunication, human error and delays in decision-making.

Information that influences purchasing can be assembled from multiple sources such as production scheduling, forecasting, inventory levels and purchase orders. Implementing a versatile solution that can combine all of this information is key to improving procurement accuracy.

One aspect often overlooked by organisations is to map and analyse the flow of information throughout the process, which in turn will identify inefficiencies and improvements. Continuously improving the flow of information can streamline decision-making leading to a reduction of lead times by removing non-value add activities along the value stream.

The minimum amount of information required can be defined as what we need vs what we have, but by equipping employees with a solution that will combine data from wider business departments and functions, employees can start to improve the accuracy of their decision-making.

Clear Processes & Guidelines

Procurement management processes should be periodically reviewed with members of cross-departmental teams who play a part. Having open dialogues between procurement, operations, finance and planning can lead to a development in understanding and communication, while also highlighting concerns and improvements.

From these periodic reviews, clear guidelines should be created or updated to set standard operating procedures for aspects such as purchase order authorisation limits, standardising purchase orders or review procedures. Ensuring that all employees are working to the same standards will ensure the process runs more efficiently without bumps in the road removing time spent rectifying issues and correcting mistakes.

Automation

Implementing automation into the process can improve the accuracy and efficiency of procurement management. If that automation also brings together all of the information points required to make informed decisions, tasks that were previously resource-heavy can be transformed into something as simple as the press of a button – reducing human error, improving visibility and standardising procedures even further.

If that automation can also tie into other departments or elements of the business such as production, invoicing, accounting, or forecasting, benefits can be multiplied across the organisation.

One such type of automation for procurement management is through the implementation of an Enterprise Resource Planning (ERP) solution. This can compile information, accurately and in real-time to allow employees to make decisions using data modules such as customer order processing, production scheduling, stock control and procurement. ERP systems come at multiple price points with a wide range of features, with some of the market leading solutions for large-scale organisations ranging well into six figures. But for the SME, a number of solution providers have entered the market at a much more affordable price point.

How We Can Help

At Explic8, we work with manufacturers to improve their internal processes and implement solutions and tools to improve efficiencies.

One of our partnered software tools is MRPeasy, an Enterprise Resource Planning software aimed at small to medium-sized manufacturers looking to take their operations to the next level. If you would like to find out more about the features of MRPeasy then read our article What is MRPeasy?

TO SIGN UP FOR A FREE MRPEASY TRIAL CLICK Here

TO READ MORE ABOUT PURCHASE ORDER MANAGEMENT CLICK Here

If you would like to discuss how MRPeasy could streamline processes inside your organisation then contact us for a free consultation.