An effective and efficient purchasing function is critical for your business. It will help you keep costs down and ensure productivity. To develop a streamlined purchasing process, your first step should be inventory management.
The best method to manage inventory is to invest in e-procurement software that provides analytics so that you can track your inventory and oversee purchases. At Bellwether, we believe that automation is king.
We’ve worked with thousands of business to streamline and control purchasing and inventory management. Our software automates the process to result in a 5-10% annual saving. Join the thousands of businesses, including the Massachusetts Department of Health, Aramark, and Pacific Life who have streamlined their inventory management with Bellwether.
Most of the opportunities to improve efficiencies start with shortening the time it takes from order to receipt. However, you want to do this without incurring an additional cost. In order to accomplish this, you must focus on inventory.
Inventory management typically includes:
Your business’ particular meaning of inventory management will vary based on the types of products you sell and how you sell them.
Inventory ties into procurement in a big way. Basically, SMBs track inventory and make decisions about ordering. Knowing when to reorder, how much to order, and where to stock products can be complicated, especially when using manual processes.
That’s when businesses usually decide to make the switch to more robust procurement software that can help in all aspects of inventory management. It even extends beyond the basic ordering and stock monitoring to encompass everything from end to end production and business management to lead time and accounting.
Your business depends on two things: inventory and your customers. However, in order to have customers, you need inventory. Think of it as a cycle, you must first have a product and then sell it to a customer in order to get more of that product. However, as your business grows, managing your inventory can become challenging.
Your inventory needs to be managed efficiently to keep your business successful. You wouldn’t want a customer to place an order and then find out that you don’t have it in stock. This is just one problem that can happen from manual procurement processes. A person may forget to input the correct information or may input the wrong information altogether, which can lead to unfulfillment and lost money.
Here’s why your inventory needs to be managed efficiently.
Your customers should always be your number one priority. When you have better control of your inventory, you can provide better customer service. Those customers will then come back, and you will create a mutually beneficial relationship with them.
Using our previous example, let’s say that a customer orders something from you and you are out of stock. That order went to the warehouse only for you to discover that it is out of stock. If this happens, you must then go back to your customer, even though they ordered the product hours or even days ago, and tell them that you are out of stock. That customer will then go somewhere else to buy the product, and they will probably never come back because you gave them a bad experience.
An innocent little mistake like this could cost you. Word of mouth is one of the most tried and true marketing techniques, but it can also be your demise. A customer with a bad experience will tell their friends, and you will lose more than just one customer.
With inventory and purchasing software, you will know exactly how much of each item you have in stock, making sure the process runs smoothly for both your employees and your customers.
On the other side of this equation, if you have too much inventory, you are actually costing yourself money. You never want to have too much because there is always a chance that you will not sell every single product. There will be absolutely no way of getting your money back if that happens. You want to always have just enough to serve your customers without using up too much space in a warehouse. Too much inventory can trigger profit losses, especially if your products can expire or damage easily.
Understanding your customer demand is the only way to prevent this from happening. Your e-procurement software will analyze data across your purchase process. It will then show you this data in an easy to read format, which will help you understand your customer demand. The data will also provide insight into rogue spending as a result of not knowing the demand.
Purchasing and inventory management software will prevent this from happening. As your business grows, it will become difficult to keep track of every product in your warehouse. It’s possible that the person in charge of ordering will forget they had already ordered certain products and make the mistake of ordering more. When you can more easily track your inventory and know just how much you have, you will reduce any unnecessary spending.
The best way to save money is to improve workflows. However, if you have an inventory management issue, you are costing yourself money. Each time an issue happens, someone will have to go back and correct the issue, making them go backward instead of forward. Manual processes, like the use of spreadsheets, can cause this easily because they are prone to human error.
However, automating the process using purchasing and inventory software will reduce the potential for risks from errors that cost you time and money. For example, if an employee accidentally marks the wrong shipment as fulfilled, you could be risking two customer relationships because one is getting the wrong order and another is not receiving one at all. Effective workflows, however, will work with inventory for a smoother process that makes procurement much easier.
Maintenance, repair, and operating supply (MRO) items are supplies that are utilized in the production process but are not seen in the end products. These items may include:
The basic role of MRO items is to keep the supply chain running smoothly. Failure to maintain, repair, and overhaul systems can be detrimental. However, organizations who maintain MRO inventory can better supply products to customers.
Typically, MRO purchases are not managed by the purchasing department but by administrative personnel. Unfortunately, these individuals may not have a complete picture of the MRO inventory at hand. Supply chain professionals should remedy this by tracking the following:
Controlling the cost for MRO items requires careful management and planning. Parts need to be available in the inventory when they are needed and they need to be stored properly to be effective. If you are not effectively managing your MRO items, you should expect additional costs.
Request for the part should not be an emergency and the purchase should not have to be expedited. In this situation, you are actually losing money. Here’s how you can avoid this.
Keep the Right Parks In-stock
Security is a requirement for inventory management. Access to the storeroom should be limited so that employees understand the importance of documenting any parts they removed from the inventory. Errors may occur during inventory stocking and item picking that also lead to misplaced MRO items.
Keep Up-to-date EBOMs
A formal Management of Change(MoC) process should help manage equipment modifications. The MoC should include modifications, changes to the process, and operational training. All of these aspects should be fully documented.
The Equipment Bill of Material (EBOM) should be revised to include the new parts for the equipment. The old parts should then be removed from the EBOM and reviewed. These new parts should be added to the MRO inventory.
Storing MRO Parts
In order to keep track of your MRO items, you need to store them properly. Improper storage can cause parts to fail or not perform as expected. Large motors, for example, need a documented and scheduled preventative maintenance (PM) program while they are being stored. They also need to be stored very specifically, with documented information on maintenance.
All three of these practices can reduce any additional costs from production time, lost utilization of the maintenance crafts, and excessive procurement costs involved in expediting need parts.
Don’t let your business lose valuable customers because you didn’t change the way you manage inventory. The success of your business depends on not only the products you sell but how you control them from the moment they arrive at the warehouse to the moment they leave. Bellwether provides the best value in purchasing/inventory software or your money back!
Selecting the right tools for your business’ procurement process can be daunting, especially if you have been using manual processes. By automating your procurement management system, you will save yourself and your business time and money, helping you to become more successful each day.
Procurement management tools will help those involved in the procurement process to navigate complex requirements easily. Instead of manually using spreadsheets that are prone to human error, you can ensure compliance and performance, and help your employees improve their workflows.
When it comes for purchase department tools, there are critical features that you should look for. Remember, how much you spend on your software will depend on your particular needs and costs vary from company to company.
When you are searching for tools, you’ll need to find one that allows the approval process to the automated. This will save your business time and money.
You should be able to ensure policy, regulatory, and legal compliance with your purchasing software.
You can prevent maverick spend through automated three-way matching.
Your tools should be able to provide analytics across all spend categories, such as vendors, departments, and products.
Tools are meant to save you time and money, especially if you are trying to automate the entire procurement process. Get rid of your manual process and help your employees improve their workflows. Here are the best tools that your purchasing department should use today.
Bellwether is the best e-procurement software in its class. We offer a free version. This software allows you to manage your purchase order process without the need to spend money until your business grows or you decide that you’d like more robust features.
If you are a small business shopping around for procurement software that allows you to manage everything from one dashboard, try the free version. However, if you are a larger corporation, Bellwether offers more robust versions that will help all of the departments involved in the procurement process function more efficiently.
Bellwether offers vendor management that allows you to track your vendors closely and make sure both parties are complying with the contract. This tool works great for consolidating vendors so that you can save time and money when it comes to your entire purchase order system.
This tool incorporates budget tracking, purchase order approval routing, and supplier boarding. It will help automate the entire procurement methods across departments so that your business can improve at every level. You can also view analytics and have notifications when you are close to or overspending your budget. If you’re used to using something like Excel for managing your procurement process, Precoro is a great tool with a simple interface that allows you to do so much without being confusing.
Standard users pay less than seven dollars a month with options for the full enterprise plan. However, if you are a smaller business which is used to manual processes, try the standard package, and see how far it can take you.
Coupa is a complete tool for managing the entire procurement process. Features include approval workflows, inventory management, and budget management. Users can make approvals from email and the mobile app. Invoices are visible within the approval and payment process so that there’s no mistaking how much a payment to your business is.
Coupa is great for larger companies who have tons of invoices and purchase orders coming in. Coupa’s pricing is tailored depending on your particular needs, so you will have to contact them for pricing information. However, you can still read customer reviews to find out how businesses in your industry are using Coupa.
This tool is excellent for small businesses and large corporations with up to 4,000 users. It’s one of the more robust tools on our list that handles:
This feature-rich tool enables end-users to create purchase requisitions and process them while other end users can accept or reject them.
With this software, you can create, approve, and manage a variety of A/P requests, including purchase orders and requisitions. The cloud-based software includes security settings, email notifications, SOX compliance. Management and reporting features allow you to manage your purchase order process more effectively.
This procurement suite focuses on accountable requisition and PO processes for efficient expense and invoice management. It uses your data to help you make better business decisions, and you can see your budget live with risk analytics.
From requisition to the placement of order to the vendor, this tool has tons of features like online approvals, public RFPs, sealed vendor bidding, and invoice matching. The interface is incredibly simple so that almost anyone already working with your business can begin using it.
SourceSuite has an automated bid feature and supplier management tools. It allows buyers to streamline the procurement process from any location electronically. It also features pre-qualification, electronic bidding, and approval workflow.
This hosted purchasing software enables procurement automation. They pride themselves on being easy to implement so that a training session doesn’t disrupt the regular day to day operations. Complete with e-invoicing, contract compliance, and cash flow management, this tool is great for businesses who want to take a look at their budget and make savings decisions.
Turbine is an affordable online purchase order management tool that allows employees to create purchase orders online or using their smartphone. Managers can then review and approve requests the same way and send POs to suppliers by email or PDF. While it isn’t the most robust software in our list, it will help automate these specific functions.
SpendMap has been around for about 25 years, helping tons of businesses streamline their purchasing workflows. It helps cut down on paperwork, control, spending, and drive savings. They have different solutions depending on your business, so make sure to talk to one of their representatives to find the best one for your business.
We know that the most significant benefit that businesses believe their manual processes have is cost. They think they are saving money by not using procurement systems. However, there are free platforms out there like Unleashed that are designed to get rid of your error-full procurement system. With Unleashed, you can track stock in real-time across locations, get visibly on all inventory management processes and transactions across warehouses, and make data-driven decisions based on dynamic inventory information.
Strategic sourcing can add value to your entire enterprise. An effective procurement process allows for sourcing strategies to improve the growth of a business. Purchasing software will provide your business with:
As you know, a sourcing process is used to choose the best product or service for a specific expenditure category. This is just one of the business processes that are run poorly by many companies, which can result in a loss of saving opportunities, delivery of inferior quality products, and even, less favorable terms.
So, how can you optimize your sourcing function? The answer is an effective procurement system.
A procurement function will provide the structure and framework to enable successful sourcing strategies.
When an expenditure comes through a defined procurement and sourcing process, it is then competitively sourced and recorded. As your business’ spend under management increases, you can expect the ability to reduce costs, forecast expenses, and manage vendors.
This purchasing data is not only the measure of spend under management, but it is the foundation for the whole of spend analytics. If you don’t know or understand the details of what you are spending, with which vendor, and for what goods or services, you won’t be able to manage the spend effectively, making it difficult to negotiate with suppliers.
Purchasing software lets you access this type of data quickly and easily. Having the readily available spend data will make it easier for those in charge of reducing costs. The purchasing anger can see the expenses broken down into categories, like maintenance costs, new purchases, and upgrades. This data can then be shared with leadership, and a strategy can be presented to the finance department so that a plan can be put in place to see what costs can be reduced.
A robust procurement system should provide detailed analytics so that companies can make business decisions based on data.
A purchasing policy must be well-defined to provide the framework for how the spend is managed. It is up to the business to use the data provided by the procurement software to decide how rigid the policy should be and how strictly it should be enforced. A policy should include only things that the company wants to enforce. This policy should promote the right spending behaviors. While many decisions also need to be approved, purchase software can automate this, helping to approve suppliers based on specific data. That means no more breakdown in the sourcing function, saving your business time and money.
An optimized procurement function should provide a strong alignment between procurement and stakeholders. From the request for a quote through the final negotiations, suppliers should have all the information they need at all times. In competitive situations, vendors may look for signs that purchasing and business owners are not on the same page and then use this to take advantage of the business.
The early stage of any project should begin with the alignment of the procurement process and the business. Using robust purchasing requisition software allows for data to be communicated effectively across all internal teams so that the right decisions can be made. With improved communication, there will be no opening for a vendor to take advantage of the lack of communication between departments.
With data available for stakeholders to see where spending is occurring and how it’s being spent, you can get a better idea of where you stand at the beginning of negotiations. This transparency throughout the business will allow everyone to stay in sync so that there is no breakdown in the negotiation process.
To maximize the value of sourcing strategies, businesses will need a defined lifecycle approach to vendor management. This management can depend on a few different aspects:
You’ll need to be able to monitor a vendor’s performance against requirements, benchmarks for pricing, and quality. A full-time resource may even be dedicated to managing a vendor relationship, which involves an understanding of product roadmaps, supply chain issues, and real-time quality metrics.
Performance data is key to business and procurement. This data can provide leverage for negotiations while highlighting changes needed in agreements or contracts, and enabling the business to have a more complete picture for the future.
By monitoring your vendor effectively, quality issues, weaknesses in supply chain or logistics, and concerns about financial stability are all highlighted. These analytics allow the procurement and stakeholder partnership to effectively leverage vendors for better prices, quality, and product innovation.
With better contractual terms and conditions based on analytics and negotiations in sync with business goals, the business can expect increased cost savings. With purchasing software, you can save both time and money as data is created for your automatically to help you make the crucial sourcing decision that makes your business successful.
Through supplier performance monitoring, the quality of goods and services will improve. As we all know, those who are monitored tend to do well in order to impress their buyers. Suppliers will notice that you’re taking an interest in their work and do their best to keep your business.
Better Supplier Relationships:
Relationships will enhance with better lifecycle vendor management that promotes communication with the supplier. With better relationships, there is a transparency that makes your suppliers appreciate your relationship all that much more.
Ongoing analysis of vendor information and financial health checks help provide the business with risk mitigation. If you notice a breakdown in the vendor’s supply chain or logistics, you can come up with a detailed solution before it negatively impacts your business and its growth.
As the role of procurement continues to increase in scope and importance across organizations, more people are looking at exactly what makes great procurement professionals. While there was a time when procurement was an afterthought for many organizations, its increased role means organizations are looking for talented individuals who can deliver the results needed to thrive. Because countless organizations simply don’t know what they should look for in a procurement professional, we want to provide some clarity by highlighting the five traits that matter most:
Anyone who has come into contact with spend analytics knows they can provide clear information on spending activity. While that can be useful, the reason companies should care about these types of analytics is the information they can offer goes beyond just spending. Specifically, it can help a company increase productivity. It can also boost savings by making it possible to streamline existing purchase-to-pay practices.
How exactly can spend analytics help your business increase savings and streamline its practices? The answer is by identifying some specific areas that can be improved, which are:
Despite more CPOs reporting directly to CFOs, as well as lots of talk about the importance of synergy between procurement and finance, many organizations still keep these functions in very distinct silos. If your organization has more space than you’d like between the two departments, the good news is bringing them together can be a relatively smooth process. A big part of why organizations can find a lot of success by bringing procurement and finance into closer alignment is the two departments already have a lot in common. So with that in mind, here are a handful of steps that can be very useful in encouraging successful collaboration:
In general, the sales cycle for B2B offerings is significantly longer than it is for B2C. From initial contact through pitches to negotiations, there’s a lot that has to get done in order for a deal to close. Because there are already so many potential roadblocks in place, it’s important for a company to provide as much support as possible to their salespeople.
By providing all the support that’s needed, companies can ensure that they’re not causing any inefficiencies that make things even more challenging for their salespeople. While salespeople will still have to contend with challenges like making it clear why a specific offering is superior to that of a competitor, not having internal hurdles to overcome can provide a significant boost.
To ensure that there aren’t walls between sales and management which are hindering the ability of the former to make deals, let’s take a look at three ways workflow automation can be successfully used:
Provide Smart Deals
One of the reasons that it’s typical for B2B sales to take longer is because price is something that’s almost always negotiable. From more complex packages to higher volumes, buyers want to be sure that they’re getting the best deal for their money. Since a lot of back and forth is already going to accompany this process, companies don’t want to create even more of it for their salespeople.
Instead, eliminating the need for drawn out internal discussions can give salespeople the flexibility to push for a sale and successfully close. With an automated approval workflow, salespeople can have the confidence to strategically discount without worrying about offering something that is going to make their manager unhappy.
Process Special Requests
Price isn’t the only element of B2B negotiations that often requires approval. There are a wide range of things that may come up which will require a salesperson to seek approval from their manager. If you want to ensure that getting special requests approved doesn’t stand in the way of a deal, an automated workflow is essential.
Dynamic Management of Inventory
One big consideration for B2B buyers is how quickly a solution can be delivered. If two offerings share many of the same features but one provider is able to deliver significantly faster than the other, the buyer is probably going to err on the side of speed. Utilizing automation in regards to inventory can help a business be as aggressive as possible with their delivery timelines.
It’s worth noting that the type of automation discussed above can benefit a business in other ways as well. For example, purchasing managers can use purchasing software to streamline their purchasing process and increase the overall efficiency of everything related to procurement.
The hotel industry has gone through some major changes in recent years. Not only has it had to adapt to the Internet, but it has also had to find ways to stay competitive in an environment with increasing pressure from sources other than traditional hotels.
Even though the changing landscape has presented very real challenges for hotels across the entire industry, the ones that have continued to thrive share some key characteristics. Specifically, the hotels that keep making progress are those that have embraced what technology can do for them.
Although it would be easy to only view technology in a negative light as a result of the additional competition it has created, savvy hotels have taken a different approach. Instead of trying to resist the major ripples created by technology, they’ve found the best ways to harness the technology that’s available.
Technology Can Play a Key Role in Procurement Growth and Efficiency
Since technology is having a major impact across most industries, those in procurement should take a cue from the hotel industry and take advantage of what’s available. Specifically, purchasing managers can gain a lot from using purchase order software. With help from purchasing software, procurement professionals will no longer need to stress over things like enforcing budget thresholds.
Instead, they’ll have the tools that are needed to make this process a breeze. The reality is that’s just one of numerous examples of the way that the right software can help optimize procurement activities. While this type of software is very powerful, what makes it especially compelling is that it can be used without the need for IT support. And to top things off, the cloud functionality of purchasing software means that data is easy to access, completely secure and backed up at all times.
An Important Takeaway for Salespeople and Customer Service
This isn’t an issue that’s only relevant to procurement. It’s also a topic that salespeople and customer service can learn from. For salespeople, the lesson is to keep an eye out for ways to make the lives of prospects easier. By actively looking for solutions instead of just trying to sell a product, salespeople can frame their offerings in a manner that is much more compelling to purchasing managers and other professionals within an organization.
The lesson for customer service is similar to that of salespeople. When someone calls a customer service representative, it’s generally because they have a problem that needs to be solved. Customer service professionals can get a leg up by always having their eyes open for the most efficient way to tackle problems. By being open to even better ways of doing things, members of the customer service team can make things easier for themselves and others.
Contact us today to learn more about how Bellwether Purchasing Software can assist your company in automating your purchasing processes. We offer a Free Live Demo and Free 30 Day Trial, no credit card needed.
The last thing any purchasing manager wants is for procurement disasters to blow up to the point where it’s costing the company resources and time. Although small errors and miscommunication are part of doing business, you still want to prevent major misfires that have a significant negative impact.
Even though it can be stressful to think about everything that can go wrong with tasks like vendor negotiations, thinking through this process can be a very useful exercise. By taking the time to carefully think through the purchasing process, it becomes possible to identify areas where things can go wrong. Identifying potential pitfalls in advance makes it much easier to figure out the best way to deal with them.
So in the spirt of preventing problems that can lead to major purchasing issues, let’s take a look at four ways you can proactively prevent a very bad situation:
Always Get Everything in Writing
When you’re on the phone with a vendor and you have a dozen other things on your to-do list that need to get done by the end of the day, it’s easy to speed through the conversation and assume that everything is in order. However, unless you have the exact order you discussed in writing, there’s always the possibility of something going wrong. That’s why you can save yourself a lot of headaches by getting details in writing. Even if you’re quite busy at the time, taking this action will save you from complications down the line.
Have a Policy in Place for Disputes
In a perfect world, purchasing managers would be able to go about their job without ever worrying about disputes. But because we’re in the real world, it’s important to understand that disputes may arise. The best way to minimize the negative impact of a dispute is to have a clear policy in place for resolving it. You want to know ahead of time what actions should be taken. This possible complication also shows the importance of keeping detailed records.
Prevent Things from Being Done Twice
In terms of wasting time and resources, duplicated procurement efforts are definitely a problem. One of the best ways to avoid this issue is to centralize all procurement efforts. A proven way to make that happen is by taking advantage of purchasing software. Implementing purchasing software will make it much easier for you to stay on top of purchasing activity and prevent issues like duplication from arising.
Whether it’s done deliberately or accidentally, buying items that aren’t needed may not seem like that big of a deal. However, this is an issue that can snowball and become a very real problem. To prevent that from happening, purchasing managers can enforce budget thresholds via our purchasing software.
Although cloud computing is a relatively new technology, it’s already had a major impact in a short amount of time. And based on market research and trends that impact will only continue to increase. Data shows that by 2020, over half of all IT infrastructure will be in the cloud.
Why has cloud computing taken off in such a big way? While there are multiple answers to that question, they all link back to the fact that the cloud provides a lot of value to businesses that use it. From securely sharing information to having access whenever it’s needed, the cloud provides what businesses need to be as efficient as possible.
Another big driver of the cloud’s success is the fact that it can be used across a wide range of business functions. One compelling example is how the cloud is impacting purchasing. To fully understand this impact, it’s helpful to take a look at the specific ways the cloud is reshaping procurement.
The Cloud Brings Simplicity
Although the underlying details of cloud computing are quite complex, the experience for users is simplified in the best way possible. Instead of getting stuck with software that’s out of date or never seems to work right, cloud purchasing software provides the functionality that purchasing managers and organizations need. Not only is this type of software comprehensive in what it does, but it’s also very easy to use.
An Easy Transition
In the past, companies that wanted to take advantage of new technology had to put together a detailed roadmap for exactly what IT needed to get done. And even with the best laid plans, there was always a chance of something going wrong with the transition. What’s truly amazing about cloud software is this type of process is no longer needed. In fact, purchasing managers can easily get started with cloud software and continue using it without the need for IT.
Take Full Advantage of Everything the Cloud Has to Offer
If you want to reap all the benefits that the cloud can provide for procurement, our purchase order software is the ideal solution. At Bellwether, we designed every component of our purchasing software with purchasing managers in mind. That means it’s able to help with everything from automating purchasing processes to putting an end to maverick spending.
Not only is our software designed to save money by increasing efficiency and taking control of spending, but it takes full advantage of the power of the cloud. As fully web-based software, approved users can access the system from anywhere. In addition to convenience, our software provides full peace of mind knowing that all company information is kept safe and securely backed up. Give us a try with our FREE 30 Day Trial, or contact us to schedule a Live Demo and see how our purchasing software can work for your company.
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