The purchase department is responsible for acquiring goods and services. While that may seem simple enough, they actually have to perform a lot of tasks in between researching the best deals and making the purchase. If you’re an SMB, you know that your purchasing department does a lot, and it’s up to them to make smart purchasing decisions that impact the entire business.

Think of it like this, your purchasing department is responsible, at least in part, for the success of your business. You never want to waste money on purchasing products that you can get elsewhere, and it’s this department’s responsibility to make sure this doesn’t happen. 

Why Should You Improve Your Purchasing Department?

The answer to this question is simple: money. Improving this department and the way it functions can end up saving you tons of money each year. This includes saving on product costs and making your employees efficient enough that during their 8-hour workday, they are accomplishing more and making your business more profitable. 

How-to Improve Your Purchasing Department

When you’re first starting out, it can be difficult to nail down the purchasing process so that everyone in the department is on the same page. However, using these tips, you can improve your purchasing department and positively impact your entire business.

Improve Buying

Not every single person in the purchasing department needs to be responsible for calling suppliers and finding the best deals. Instead, you can put a team in place responsible for this task and allowing other members of the department to focus on the next stages.

You can also manage acquisitions systematically buy appointing one person to be in charge of calling suppliers and another for comparing prices. Whatever you choose to do, you must have a process that outlines the rules of buying so that everyone is doing it the same way and accomplishing each task.

Analyze Spending

To analyze spending, you will need to conduct a spending analysis. This analysis is a detailed review of how you spend, and it’s critical to review in order to improve the procurement system. Make sure to analyze each and every factor that affects the price of products, such as:

• Raw material costs
• Inventory costs (including space requirements, heating, and insurance)
• Transportation expenses
• Supplier charges 
• Payment terms
• Shipping and handling costs

By improving this aspect of your purchasing department, you can save enough money for other areas of business, such as marketing, and hiring more employees as you grow.

Analyze Demand

To analyze demand, you’ll need to find out your company’s essential needs when it comes to purchasing. Only focus on the critical purchasing decisions that you make. In order to do this, you may have to rewrite internal policies that include new criteria that determine which products and services are essential.

You’ll also need to focus on quantity. If you’re buying in bulk for a lower price, consider how much it costs you to store items that you may not need for months to come.

You may want to consider buying cheaper goods from overseas. However, purchasing from foreign suppliers comes with costs that may make it not worth it, such as higher shipping costs. Since there are time differences as well, you can also expect a delay, so it’s not recommended that you use these suppliers for items that you need immediately.

Reduce Complexity

You can simply buy more standard parts or goods from suppliers instead of the more expensive customized items. If this is possible for your business, talk to your suppliers to make sure the purchases fit your needs and that you’re not overspending on customized items. If you have a good relationship with your supplier, they should have no problem helping you cut costs, because you’ll continue to make purchases that benefit both your business and theirs.

Build Strategic Partnerships

Building partnerships is easy. However, building strategic partnerships may be difficult for some businesses. If you work with a lot of suppliers, you’ll want to start cutting down the list and try working with only a few.

If you work with fewer suppliers, you can save time and resources. You’ll also be able to build better relationships because you have fewer businesses to work with.

Your suppliers will feel honored as they have been chosen to be the few you do business with. This will help continue to build relationships so that you can expect more flexibility from them when it comes to your needs.

Always remember that your partnership should be mutually beneficial. You should be helping them succeed just as much as they are helping you. When you negotiate, keep in mind that you’ll have to help them see how both sides can benefit. This will help establish trust between you and them so that you can continue to be successful.

Evaluate Suppliers

Once you have a smaller list of suppliers to work with, make sure to evaluate them regularly. You can establish your own system for assessing their performance, but make sure to include these factors:

• Flexibility
• Delivery time
• Costs
• Quality of service

Having a document available for your suppliers to review will also help them see where their performance can be improved, which can help your business and theirs as they have multiple buyers they deal with.

Invest in Purchase Order Management Softwarepurchase order software. procurement software

In the modern age, there are so many technological tools that can help your business grow and succeed. Your procurement process may have once been simple enough to warrant the use of a spreadsheet. However, as you grow, you’ll find more human errors and complications that make using manual processes impractical.

Many SMBs start out using QuickBooks to help them send purchase orders more quickly by creating a QuickBooks purchase order, which automatically fills in fields for you. While automation is key to success in the modern age, this program can’t do everything you need when it comes to procurement. Instead, users can integrate Bellwether with QuickBooks to:

• Enter invoices into ePMX
• Three-way Invoice Matching (PO, Receipt, and Invoice)
• Bridge invoices into QB for payment

Integrated procurement software will help you manage all of the day-to-day functions of the purchasing process so that you can save time and money while your employees focus on more important tasks, like building relationships with your suppliers.

For businesses who want to save significant time and money, robust purchase order software can help you manage vendor/ supplier relationships, find the best deals, and turn POs into invoices with a few clicks of the mouse. These technologies completely revolutionize the way you’ll handle purchasing, making everything from acquisitions to approval processes much more simple.

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Being out of stock means that you don’t currently have any of a particular item available for purchase. This problem for business owners typically happens because someone in the purchasing department does not order enough inventory to satisfy customer demand.

Preventing Out of Stock Situations

Luckily, becoming out of stock can be prevented with purchase order software. Cloud-based inventory management systems let you easily track your inventory in real-time so that you know exactly what you have in stock and when you need to reorder products.

Consequences of Running Out of Stock

Let’s take a look at the consequences of running out of stock and see how e-procurement software can help you avoid them.

Lost sales

When you run out of stock, a customer can’t purchase it from you. If a customer can’t purchase from your business, you have lost a sale. If you have a huge demand for a product but run out of stock, you will lose multiple sales.

Lost customers

Ultimately, lost sales lead to lost customers. When someone visits your website and attempts to make a purchase that they can’t complete because you are out of stock, they will go somewhere else for a similar product. We live in a time where people want their e-commerce products delivered quickly. If you can’t deliver on that, they will take their money elsewhere, and potentially never come back.

Bad customer reviews

If you run out of stock, your customers will lose the trust they had for your business. You can also expect some negative reviews on your website or social media page. Word of mouth is one of the most tried-and-true marketing techniques because customers rely on one another’s opinions before making a purchase. This is especially true when it comes to e-commerce.

Declining business growth

When word of mouth spreads, particularly negative word of mouth, you can expect a decline in sales, which leads to a decline in growth. Customers will not want to purchase from someone with bad reviews, and the worse it gets, you can expect fewer and fewer customers.

The Solution: Automation

Automation is key for preventing problems associated with being out of stock. Many businesses already use automated systems, which make the purchasing process easier and help to save time.

QuickBooks users can experience even greater efficiency and productivity when they integrate with Bellwether’s robust purchasing software.

Integrating e-procurement solutions with QuickBooks purchase order software will drastically improve all areas of the procurement function. Users can pull down these items into ePMX:

• Vendors
• G/L Accounts
• Classes (Job Codes)
• Projects
• Terms
• Currency

When integrated, users can enter invoices into ePMX, do a 3-way match with PO, receipt, and invoice, and bridge the invoices into QB for quick payment. All of these tasks save time and help the business run more smoothly.

In order to understand how a PO system can help you avoid out of stock solutions, we must first understand why businesses run out of stock. 

Why Did Your Business Run Out of Stock?

Running out of stock is a problem many businesses face, especially if they don’t have a refined procurement process in place. Here are a few reasons why you may run out of stock.

Inaccurate Data

In order to know what you have in stock and what you don’t so that you can make effective purchasing decisions, you’ll need to rely on data. Inaccurate data will always lead to poor purchasing decisions and cause your business some distress.

Product Ordering Gone Wrong

Inaccurate data will lead to ordering the wrong quantity of product. It may even lead you to order the wrong product altogether. If you don’t order enough product, you won’t keep up with demand, which means you will lose sales.

Manual Processes

Your inaccurate data, which is the basis for the procurement process, must have come from somewhere. If you are using spreadsheets or a paper-based system, the odds are that human error is what leads to inaccurate data.

Cloud-Based Purchase Order Management Software

As you can see, the result of using manual purchasing processes can have a butterfly effect on your entire business. Procurement software can completely eliminate the risk of running out of stock and help keep your business successful and with happy customers.

Eliminate Manual Processes = Better Procurement

By eliminating spreadsheets, your purchasing process is no longer prone to human error. That means no more data inaccuracies that force you to make bad purchasing decisions. When this risk is mitigated, you can expect a smoother and more efficient purchasing function.

Efficiently Managing MRO Inventory

MRO inventory differs from traditional inventory because it lacks the same controls or practices. It is not typically measured in terms of inventory on hand or usage. Here are a few of the challenges of managing MRO inventory:

• Supplies required for MRO tasks are in-stock but can’t be located
• Items required for MRO are bought with immediacy, ignoring the price in favor of availability
• Expedited shipping costs more

How Can Procurement Software Help Manage MRO Inventory?

Purchase order software can help you do the following much easier, and in less time:

Track, Manage, and Control MRO inventory

To improve the MRO procurement process, you’ll need to track and manage your MRO inventory more effectively. Procurement solutions will help you more easily track items that can frequently get lost and lead to unnecessary spending.

Faster Purchase Requisition Approvals

When you need an item immediately, the process can get bogged down by the approval process. With cloud-based solutions, you can set certain criteria that allow MRO supplies to be purchased immediately.

Delivers Valuable Data

Predicting when you’ll need certain MRO items will help the entire procurement process run more smoothly. E-procurement solutions will give you easily digestible data that allows you to be proactive instead of reactive.

Reduce the Number of Suppliers You Work With

Tracking the performance of your suppliers may not be part of your procurement process. However, by determining which suppliers work best with your business, you can cut the number of suppliers you work with to improve regular business functions and improve relationships with them.

Improve Budgeting

Purchasing software saves your employees time, which saves you money. Also, by reducing unnecessary spending, you’ll have more money to put into beneficial business tasks, like marketing and human resources.

By knowing which items you have and which you’ll need soon, you can reduce the immediacy of purchasing MRO supplies that are either in stock and lost or need to be replaced. This means cheaper delivery charges since you won’t need products the next day.

Purchase order system software will improve your entire business, helping you save and make more money each day.

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Efficient purchasing also means having inventory control. Businesses need to know what they have in stock and what they don’t in order to make the right decisions when it comes to procurement. While you may already have a system in place and know which items need to be replaced and when, it can be difficult to determine whether your purchasing function is as effective as it can be.

By improving your purchasing function, you can expect significant cost savings. Ordering the correct amount of products that you need to keep your business running reduces any maverick spend on items you don’t need.

Goals of Inventory Management

An inventory management strategy aims to:

Prevent Dead Stock

When you run out of stock of an in-demand item, you’ll end up losing money and valuable customers. However, overstocking can also cost you money because it takes up floor space and can result in waste if the items do not sell in time. If you lease warehouse space, this can be extremely detrimental. You’ll want to minimize dead stock storage to make room for items that will sell to keep your costs lower.

Improve Organization

Effective inventory management requires a certain level of organization, which includes real-time tracking. You need to know where every item is located, how fast it’s used or moves, and what quantity you have in stock.

This will enable faster order fulfillment and reduce the risk of you having to tell valuable customers that the item they ordered is not in stock. Tracking these items will help you see which inventory you have and which you don’t so that you can determine what items need to be purchased and when.

Improve Reordering

Inventory management also means ordering the correct amount of stock you need and moving it as quickly as possible. When an item is sold, it should be taken out of stock automatically. When in-stock items reach a certain limit, the item should be automatically triggered for reorder, whether it has to be approved or not will be up to your business practices.

Positively Impact Budgeting

By effectively managing your inventory, you can better manage your cash flow. Keeping the right amount of goods in stock is key to your success.

Inventory Management Techniques

Your business requires a strategic inventory management process that saves time, boosts productivity, and helps keep your business a success. Check out these tips and techniques for an effective purchasing and inventory control system.

Invest in Software 

If you want an effective purchase order system, which includes inventory management, you will probably need help as your business expands. Technology is crucial to businesses who have to manage a lot of items, suppliers, and budgets.

Purchase order management software uses automation to minimize data entry and update systems in real-time. This means that everyone involved in the PO process will be able to see what’s in stock at any given moment, and the database is then updated each time a product is sold or used.

Cloud-based purchasing software creates and stores tons of data to provide your business with the information you need to make informed purchasing decisions. You can view which items go out of stock most frequently and when you need to reorder them. You can also view the products that aren’t moving as much as you thought they were and change the policy on how often those items are reordered.

Remember, that the longer an item sits in your warehouse, the more it costs your business. Make sure that you use the data to make sure that your procurement process is as efficient and effective as it can be.

Predictive Analysis

Be as proactive as you can be. Use past purchase information to understand buying items for certain items and categories. Make sure you look at the data regularly because using insights in a strategic way can help boost sales and save your company money.

Predicting demand will be critical to your inventory management function. Use the data from the procurement software to find market trends and analyze previous sales. Next, you can examine season trends and any marketing efforts to ensure that you have enough product for an expensive spike in sales.

You can’t account for all variables that will affect your purchasing and inventory functions. However, you can plan for the future of your business and determine how to proceed using real-time data.

Centralized Ordering

Ordering through a purchasing office gives you control over incoming goods. Centralized ordering gives you dedicated experts trained to negotiate for the best deals. Purchasing managers will negotiate the best quality for the lowest price to keep your business running smoothly.

Suppliers typically require a minimum quantity to balance their costs. However, purchasing managers can work with suppliers to lower costs and spread delivery over a certain time period to avoid overstock costs.

Always Have a Back-Up Plan

For your procurement system to run smoothly, every step of the process will have to work properly. There are some inventory factors that you have no control over, though, such as raw materials and weather.

Your supply chain will invariably hit a snag, which can affect your entire company, including its customers. In order to mitigate risk, you’ll have to have a back-up plan for when things just don’t go according to plan.

While you can’t plan for everything, you can make your process a little more flexible to minimize any negative impacts on your business. Your back up plan might include local suppliers who can deliver quickly when there is an impending storm, and you don’t know when you’ll get products from another supplier.

A good back up plan involves communicating with your suppliers and building good relationships with them. If you maintain beneficial relationships, your suppliers may even give you a heads up when there may be a shortage so that you can plan accordingly.

Audit Regularly

Good inventory management and purchase order software will provide you with all the information you need. However, humans involved in the process can still make mistakes. For this reason, it’s important to make sure that the stock matches your reports.

You should still do a physical inventory once a year, but even that may not be enough. If the count doesn’t match the numbers, it can be complicated to find out what happened. To prevent this from happening, consider spot-checking your inventory every so often. You can pick a few of the items that move the fastest and count them to find any discrepancies.

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source https://www.bellwethercorp.com/how-to-implement-an-efficient-purchasing-and-inventory-control/

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. 

What is purchasing and inventory management?

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:

• Controlling and overseeing purchases
• Maintaining the storage of inventory
• Controlling the amount of product for sale
• Fulfillment

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.

Why is inventory important, and why should it be managed efficiently?

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.

Customer Relationships 

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. 

Warehouse Space 

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. 

Business Workflows

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. 

The Importance of MRO Inventory Management and Procurement

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:

• Gloves
• Safety Equipment
• Computers
• Cleaning and Lab Supplies
• Industrial Equipment
• Upkeep Supplies, such as lubricants, gaskets, repair tools

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:

• Lists of required MRO items generally used
• Lead times needed to resupply items
• MRO item usage and depletion rates

Improving Inventory Management for Effective Purchasing Function

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!

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source https://www.bellwethercorp.com/importance-of-inventory-management-for-an-efficient-purchasing-function/

Business owners like you are always trying to find ways to save money while still effectively and efficiently managing their business. What many business owners don’t know is that savings can be found in the procurement process. By refining your procurement strategies, you can boost company productivity and save money. 

Here are some practices to help you increase your procurement savings. 

Consolidate Vendors

Where possible, you should start consolidating your vendors. Supplier management will help you maximize your savings. Take the time to identify strategic vendors and consolidating the total number of vendors you work with. 

Consolidation will also allow you to get volume discounts and a higher quality of goods.  Because there are fewer suppliers to manage, the process will become much more efficient. You may also want to keep a couple of backup vendors in the event that the main vendors cannot fulfill your orders due to an emergency.

Make sure to let your vendors know that you are consolidating and you may receive lower bids from them for products that you are regularly purchasing. By allowing them to compete with one another, you could end up saving your business money. 

Reduce Maverick Spend

Rogue spending can account for up to 80% of purchases in a company that lacks efficient procurement software. Conduct a spend analysis by looking through spend records to find any uncontrolled spending. Once you’ve seen any, assign it to your preferred suppliers. Next, go over your process with your team so that they know when they are spending in excess.

Improve Risk Management

You can improve your risk management by making sure that your procurement process doesn’t rely on just one major supplier. Pay attention to your contracts and follow up with suppliers. Take action to avoid logistical issues, like planning for a back-p supplier. All of this will help your business run more smoothly, especially if any of your vendors have hiccups of their own.

You can also renegotiate your contracts with value-added services that will help save you money, such as extended warranties or free shipping.

Reduce Internal Costs

Streamline your processes to reduce internal operational costs. Take a look at your current PO system and find out which processes can be automated. The more automation your procurement process has, the more work your employees can get done in one day. This efficiency will help your business accomplish more tasks in the same amount of time.

Utilize Category Management 

Category management will help you find opportunities to save money and cut down on your internal costs. By creating exclusivity agreements, you can boost your profits.

Avoid Leakage

Spend leakage will happen when spending occurs outside of the terms of the contract. Your procurement process should monitor everything for compliance, including payment terms. If any non-compliant purchases are made, which caused leakage, procurement can help prevent it from happening again.

Bid and Quote Management 

Compare prices by allowing companies the opportunity to bid for their work. Their bids should include how their company will solve your business problems and provide an estimate for their work. This process will help you receive high-quality goods and services at competitive prices.

If you notice that a company you’d like to work with if giving you a higher bid than you’d like, contact them. You can ask if there is any way you can work together for a lower amount. You may also give them the average bid amount and tell them you would like to stay in that range. 

Up-Skill Employees

Many businesses don’t want to spend money into training their employees. However, by doing this, you can improve your bottom line in the long run and keep your business running smoothly. Investing in training to develop certain skills, such as negotiation skills, or training them how to use a procurement system, will improve the whole procurement process. 

Remember that your employees are your most significant asset, so investing in them is like investing in your own business. If you have someone in the company who would be a good teacher, schedule them for some time to train other employees how to do their job. While you may lose money for just that day, you will earn it back and then some as your employees learn new skills. 

Review Terms

Review your suppliers’ terms and discounts and make a master agreement. Talk with your suppliers to find savings by changing your purchasing patterns. Buying in bulk may save you money from one supplier but can cost you from another.

You will want to make suppliers compete with one another so that you can get the best terms. You can do this by telling them another supplier has agreed to certain terms in your favor and that you will only be able to work with suppliers who can meet those terms. 

While some suppliers won’t allow you to change your terms, they do want your business. It’s in your best interest to try to find ways to work together and come up with a solution that benefits both parties. 

Use Technology

Technology can improve efficiency and keep costs down. E-procurement software, for example, can help your team communicate faster and get more work done. Utilizing technology is one of the most effective ways to increase the procurement process cost savings. 

Work Together

Communicate with your employees and stakeholders so that you can work together to come up with a plan. Your goal should always be efficiency and effectiveness. If you are finding that too many mistakes are being made in the procurement process and notice that it costs too much money to keep fixing these issues, brainstorm how the company can better work together.

Make sure to include employees across apartments since finance, human resources, and even your assistant may all have ideas that can improve the process. 

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source https://www.bellwethercorp.com/strategies-to-increase-procurement-savings/

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.

What Features Should Purchasing Tools Have?

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. 

Approvals

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. 

Compliance Tracking

You should be able to ensure policy, regulatory, and legal compliance with your purchasing software. 

3-Way Matching

You can prevent maverick spend through automated three-way matching. 

Insights

Your tools should be able to provide analytics across all spend categories, such as vendors, departments, and products.

The Best Tools for Purchasing Departments

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

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. 

Precoro

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 

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.

Workplace Requisition and Procurement

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:

• Job costing
• Budgeting
• Reporting
• Self-service portal for vendors

This feature-rich tool enables end-users to create purchase requisitions and process them while other end users can accept or reject them. 

Aestiva Purchase Order 

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.

Fraxion Spend Management

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.

E Buyer Assist 

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

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.

Procurement Port

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 

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

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.

Unleashed Software

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.

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Business intelligence (BI) is all about data that can be used to improve business functions. One is the procurement functions, which is integral part of corporate performance. Procurement can be a complicated process, but business owners must be able to continue to obtain high-quality products and services at sustainable costs. BI is an effective way to do this as it provides essential data to businesses who may not have the information they need to make the correct business decisions. 

What is Business Intelligence?

In general, BI is the use of analytics, technologies, and software to retrieve and extract data from enterprise resource planning (ERP) systems. That data is then converted into readable, valuable information. 

BI allows businesses to summarize lots of data into meaningful, fact-based information. This information helps business owners and stakeholders make decisions and solve information-related problems. 

Procurement Software

Purchase order software provides its own business intelligence. Because business intelligence is all about data, effective purchasing software can quickly interpret data and turn it into readable information for business decision-makers. It can also automate processes, such as approvals, to make the entire procurement process go faster. At the very basic level, the data provided by procurement software can help businesses determine where in their procurement process, there is a breakdown, causing the entire process to delay and negatively impacting business relationships. 

Business Intelligence and Procurement

Business intelligence and the software that comes with it can help with strategically sourcing goods and services to provide procurement analytics. E procurement software can easily provide your business with the business intelligence it needs to make important decisions. 

Procurement and supply management can keep costs down. The management of these aspects of a business should include real-time collection, tracking, and analysis of every part of the procurement process. The most effective procurement software collects and analyzes data at each stage to ensure optimum cost and maximum profit. Each activity, transition, and event generates data that should be analyzed. 

Let’s take a look at how business intelligence involved in the procurement process can improve its function. 

Real-Time Data to Identify Cost Savings

Organizations should integrate spending and transaction data across departments into a single system. Blending these sources allows the procurement team to gain timely insight into spending patterns and take measures to correct any issues. In other words, BI allows the team to be proactive instead of reactive. 

Procurement data used to focus on the past, but this approach is now evolving. Intelligent data will help procurement teams work with data that looks forward and proactively develop strategies. 

Data-Driven Decision Making 

You may have experienced aspects of ineffective processes, but were unable to prove them, making it difficult to enact change in the procurement process. With interactive dashboards, the procurement staff now has the data to back up their decisions. By collecting this data over time, it can positively influence procurement strategies across departments. The data can then be used to set key performance indicators (KPIs) so that teams can evaluate factors that are crucial to success. 

BI dashboards help to ensure proper data integration so that changes can be made in real-time. 

Analyzing Supplier Relationships

The difficult and complex process for maintaining supplier relationships can create strained partnerships. Without the proper data and insights, there is a lack of trust and transparency between partners. 

Your business requires quality goods and services by a certain date at the best possible price. On the other side of this, the suppliers need more business, and they want to receive advance notice of purchases and demand patterns. There is a new procurement trend dealing with supplier relationships that involve optimizing value over just price. This will determine the total cost of acquisition and operating costs. Procurement analytics provide insights that will further develop beneficial symbiosis between businesses and suppliers. 

Enabling Automatic Purchases

Using BI solutions within the procurement process can provide benefits to both the supplier and business. These applications can lift the workload burden off of the busy shoulders of many procurement teams. 

Procurement professionals often have to spend much of their time with transactions, distracting them from the more complex responsibilities involved in strategic sourcing. BI dashboards make automated purchasing possible, reducing the buyers’ workload and allowing them to focus on more difficult tasks. 

With this, the buyer doesn’t need to be involved because the information is sent directly to strategic suppliers so that the business receives the best value for the items they need within the established time frame. Automated purchasing allows buyers to provide concrete feedback to their suppliers. 

Monitoring Performance

BI lets you monitor supplier performance in real-time. With easy access and data-based decision making, you can choose the suppliers that benefit your business. With BI tools like dashboards and reports, the procurement team can easily analyze cost, quality, and delivery performance by the supplier. 

These analyses allow for quick identification of the most efficient and reliable business partners to provide data and support communication with them. If a supplier has breached the contract, you will then have data to back up your claims. Also, by utilizing data visualization practices, you can view and compare supplier performance quickly and easily. 

Increasing Transparency

Data allows for transparent and business-beneficial negotiations between businesses and their suppliers. BI tools can organize data and tell a story to show how suppliers are performing compared to other suppliers. BI purchasing software dashboards can show this information:

• How the suppliers are evaluated
• How they are performing 
• Comparisons with their competitors
• If the data is accurate, unbiased, and current

Final thoughts

An effective procurement process should always utilize procurement software to get the best, real-time business intelligence. This data will provide individuals across departments with the analytics they need to make data-driven decisions. This information will help increase efficiency and keep costs down, helping businesses achieve success and growth. 

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The procurement process can be complicated, which is why many businesses are still using spreadsheets and manual processes to control and manage their purchasing. Strategic procurement spans across all different departments of an organization. A successful procurement process is crucial for keeping costs down and making businesses more efficient. An effective procurement strategy includes a financial plan which helps manage budgets, workflows, and production timelines to keep everything aligned with the business objectives. 

Without a defined process, it will be challenging to keep the daily functions of a business efficient and productive. It will also be near impossible to stay on budget. While every strategy should be tailored to the individual business, it should consider the company’s current status, stakeholders, market conditions, and company goals. 

These are the goals of a procurement strategy:

• Minimize opportunities for lost savings 
• Identify authorized buyers
• Align purchasing and company objectives
• Increase efficiency
• Leverage supplier relationships 

Here are the steps you can take for a successful procurement process:

1. Purchase procurement software

By not integrating procurement software, you could be losing money from errors, delays, and even overpayments. Procurement software increases productivity while minimizing errors and reducing the need for data entry and redundancy. You can also track purchases from purchase order to payment, eliminate the need for waiting on approvals, create invoices from PO’s, and use the data for all parts of business operation. 

2. Assess your current business

Know how the company is doing at this very moment before moving forward. If you have a strategy in place or are currently using spreadsheets or inexpensive accounting software, determine if this software is meeting your needs. If your business is growing, assess whether these purchase order software systems will be able to meet your future needs when it comes to inventory, invoicing, and accounting. Identify any weak areas of the procurement process that need improvement and look for areas where the money is being wasted. 

It may also be beneficial to talk to all of your employees involved in the purchasing process so that they can give you an idea of their day-to-day and what maybe disrupting the process. 

3. Talk to the stakeholders about a new procurement strategy

The stakeholders will need to be involved when you are refining, or even defining, your procurement process. Make them understand the goals and sell them on the idea of a speedy turnaround and better production time, with more efficient workflows, reduced errors, and significant cost savings. 

4. Define Goals

While the goal of your business may always be to make money, your strategic goals should be detailed. How will you make more money? A well-defined goal includes a target and a plan. A goal could be, for example, increasing sales by x percent. You should always make sure your goals are measurable and realistic. The best way to measure your results is by using that procurement software we discussed that will provide you with analytics to let you know how your business is doing. 

5. Priorities

It’s time to determine how to prioritize purchases. This process will vary from business to business. If you’re a retailer, for example, you’ll need to work with the marketing department to determine which goods should be pushed and when. Lucky for you, purchase order software allows you to more effectively communicate across departments with data that can affect your priority decision making. 

6. Define and Refine your Policy

You should make a list of authorized purchasers and a budget for each department so that it’s clear who is allowed to spend and how much. Expected purchases can be approved automatically using purchase order software, eliminating any wasted time that could be detrimental to a business relationship. 

Define specific guidelines for each department when it does to procurement. This should include which suppliers are preferred, what would need approval, and who would provide approval. 

7. Look at your sourcing strategy

If you’re in search of new suppliers, you should typically take bids from three or more suppliers. In order to take on new companies, you will need to refine your sourcing strategy. The policy should specify the criteria used to determine which suppliers are chosen. This criterion should include, supply quality, price, delivery times, service, compliance with regulations or company objectives, or anything else you value in a supplier. 

You should already have a preferred vendor list that you crafted by evaluating suppliers based on specific criteria. If you think your list could be negatively impacting your business, it may be time to take another look and revise the requirements so that the purchasing decisions don’t lead to lost sales.

When it comes to negotiations with vendors, it’s essential to select the right bid. The lowest bid may not always be the cheapest option in the long run. If you go with the lowest bid and don’t have a strategy in place, you may end up with cheap products and your customers may lose faith in your business. Make sure your criteria cover all potential issues that can arise from a poor vendor relationship. 

8. Determine success metrics

Once you have executed your plan, your new procurement process should be evaluated so that you can determine its success. Common metrics include:

• Deceased costs due to the reduction of errors
• Efficient delivery schedules
• More favorable contract terms 

Once you’re able to take a look at the metrics, you can continue to fine-tune your strategy as necessary to enhance the process as your business grows. 

You can also use purchasing software to determine even more analytics that can help you measure success. You’ll be able to see where any breakdowns within the company occur and come up with a data-based solution to fix the issues.

Your procurement strategy should be a roadmap for business spend and used to maximize the budget and minimize errors, late payments, maverick spend, and anything else that may negatively impact the procurement process, and in turn, business relationships. 

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Small-to-mid sized businesses are always finding ways to improve workflows and create efficiency to save money. While there are many different ways to execute the purchase order process, there are a few trends that are becoming increasingly popular for SMBs.

What are the top trends that affects procurement process among SMBs?

Increased Automation

Automation promotes efficiency and productivity, helping businesses control costs and improve workflows that benefit their customers and the business itself. Believe it or not, there are still many small businesses using spreadsheets from Excel to manage fheir purchasing process.

A simple spreadsheet is unable to keep up with purchasing demands and is prone to human error that can devastate the procurement process. E-procurement software is becoming more popular as businesses see the benefits of automation and how it makes their business run more smoothly and with less errors. Automation can take place at any part of the procurement process that doesn’t require much human intervention. Instead of taking a purchase order and manually inserting the correct information into a new invoice, procurement software is able to automatically produce an invoice based on the precise information on the purchase order, making it less prone to human error and efficient to transform the day-to-day operation of a business.

Data-Driven Decisions

With technology becoming increasingly popular for businesses to handle their procurement process, business owners are able to make data-driven decisions. With procurement management software, analytics and data are easy-to-read in one simple space and can be used to create better processes, make important business decisions, and control spending. While a manual procurement process may be too complicated to effectively make important business decisions, owners and operators will be able to make more well-informed decisions much easier. In the future, we will only see data-based decision making grow among SMBs as technologies will deliver better insights into the procurement process.

Digital Strategies

Using cloud-based procure-to-pay software has also made business owners think about their current digital strategy to adapt to AI and automation. While this type of procurement software may not directly affect all strategic business decisions, it has been increasingly proving the worth of digital solutions to make businesses consider the current landscape of their entire business and motivate them to implement digital strategies in all aspects of their business inside and outside the procurement process that help grow their organization.

Talent Pools

While many companies still use a more manual procurement process utilizing spreadsheets and the like to execute their current purchase order processes, they’ll soon find a shift in their talent pools as procurement software changes the way procurement is done. Many businesses are finding that their employees are not qualified to implement technologies like AI into their existing procurement process, leading to an increase of hiring more technology-driven employees to streamline workflows and improve business functions. While business functions and operations shift to more automated procurement processes, they’ll find a need for more tech-savvy employees that are able to complete tasks quickly and effectively using the new software.

Thinking Beyond Price

Customers are important to any business and procurement software has shown to improve the relationship between vendors and buyers. Because synergy between these two parties is important for the survival and success of business-to-business operations, customers need to have visibility in every step of the procurement process to get the best price possible. Transparency not only improves trust among businesses, it will also promote competition to drive profits. Thinking beyond the price and focusing on beneficial relationships, businesses will need to analyze their performance to reduce costs and increase efficiency to make their customers happy and coming back, business strategies that procurement software can help execute quickly and easily. Purchase order software will also help customer service agents answer inquiries and questions from customers regarding their orders or issues, enhancing the customer experience.

Risk Management

There are some uncertainties in running a successful business, but an effective procurement process can minimize risk and prevent legal issues in the future. Being compliant with the legal standards is a great start, but it’s not everything. Because word-of-mouth is the biggest influencer of customer purchase decisions, your procurement process needs absolute transparency to reduce possible risks that can result in a bad reputation.

Focus on Indirect Spending

One of the biggest advantages of effective purchase order software is that it helps control costs. Indirect spending needs to follow a refined process to avoid leakages, contract terms, paperwork, and dealing with lots of complicated customer information. This process can be difficult and businesses can easily miss out on discounting, budget accuracy, and supply chain visibility. To prevent missed opportunities, more businesses are looking for automated financial P2P solutions that can be integrated into their current accounting system. This will minimize unnecessary spending by streamlining the entire contracting process.

Artificial Intelligence (AI) Systems

As procurement shifts to a more technologically advanced process, artificial intelligence will play a crucial role in how businesses perform their purchase order process in the future.Repetitive tasks that your employees perform daily will be done using artificial intelligence to free up team members to focus on more important business-affecting tasks. Mundane tasks will soon be put on auto-pilot to also allow businesses and their employees to focus on building beneficial relationships with their customers.

AI and Chatbots

With the implementation of AI, more SMBs will focus on chatbots. In order to retain customers and gain new ones, a company needs to be able to respond quickly to requests for information and be able to answer any questions in a timely manner so that the customer doesn’t go elsewhere. While staffing an employee who can complete these tasks may be your first choice, it’s expensive to have an employee available 24/7 to handle inquiries as they come in. Instead, chatbots use advanced technologies to simulate human conversation in an automated way. They can also help automate routine tasks and collect data. Chatbots are becoming the less expensive option than hiring a human to perform simple customer service tasks, making them a practical solution for all SMBs who want to be able to respond to customer inquiries quickly and accurately.

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Efficiency is key when it comes to running a successful business. Because efficiency improves productivity and can help businesses easily manage certain aspects of their business, it’s important to find ways to increase efficiency during the day-to-day operation. An efficient purchase order system can be implemented gradually or all at once to improve function of your business. By using purchase order software you can streamline the day-to-day workflows of your business, save money, and increase sales easier than using a manual process that takes up time, money, and energy you could use to perform other important business tasks.

How do you improve order processing?

While your current order processing may be working well enough, you’ll find that you can save time and money by streamlining your current workflows. Improving your purchase order process with PO software doesn’t have to be a stressful, time-consuming task, and can be done with a few simple tips.

E-commerce Integration

Whether you sell your products online through a website or other marketplaces, or haven’t considered making a move to e-commerce, selling your products online will not only boost sales but drastically improve your PO process when you synchronize actions from different platforms and put them in one spot. Instead of using dashboards from all of the different marketplaces you use to sell your products, you can integrate your software to demonstrate all critical business information in one simple and easy-to-use platform.

Automation

Using automation wherever you can is an effective way to streamline the procurement process. It will also reduce errors and the cost of the entire process. Automation and flexibility should come together to allow customers to place complex orders and let you approve requisitions quickly and easily. Automation can also take a purchase order and turn it into an invoice in one easy step to create documents that are crucial for business management and budgeting.

Inventory Control

Controlling your inventory is not only a necessity for the organization of your business, but it’s important to maintain quality relationships with your customers. It’s the age of immediate gratification when it comes to purchasing products. Whether you’re direct-to-consumer or sell to other businesses, your customers expect their orders to be processed quickly and delivered in a timely manner. If a customer places an order only to find out a few days later that the item they bought is no longer in stock, this can be detrimental to your entire relationship with the customer. As the business, you should know how many of each product you have in your inventory so that you can avoid problems in the future.  This can be critical and make customers choose whether or not to purchase from you again. If your business shows that it doesn’t even know what it has in its own inventory, you’ll lose the trust of your customers, something that can break any business.

Communication

Purchase orders are all about one thing: Communication. If communication is lacking through the entire purchase order process, you’ll face delays and disruptions that can damage your relationship with customers and prevent them from placing orders with your business in the future. Orders need to be transferred to the correct departments and employees to improve workflows. You’ll also need purchase orders and invoices that communicate all necessary info with customers and other employees within your business. Your information needs to be up-to-date and correct so that you can complete the purchase order process more effectively and efficiently.

Simplify Database

No matter the way in which customers place orders with your business, you need to be able to receive vital information without issues. This information must then be available for your employees to access from across different departments. Data must be seamlessly transferrable throughout different areas of your business, from the accounting department to production and customer service. Many databases can be complicated and confusing to use for both customers and businesses, making placing and processing orders more difficult than it needs to be. Problems from an overly complicated database and purchasing system can cause a breakdown in the process and negatively affect the entire customer experience. Instead, using one program that can be integrated with all of the others and show vital information on one screen instead of multiples, can streamline workflows throughout departments and lead to more sales.

Simplify Documentation

The procurement process has a few vital pieces of information for each customer: the purchase order, invoice, and any service terms. This documentation is necessary to prevent risks and help improve customer service and production. While one purchase order may have many documents to maintain, these should all be in one spot so you can find them easily when you need them. It will also benefit your customers if they have questions about certain orders and pricing. Because you can’t always rely on your customers to keep the proper documentation, it’s important that you have all of the important information to prevent confusion in the future.

Purchase Management Software Integration

Whether you manually create purchase orders and have used spreadsheets throughout the purchase order process, or have used purchase order software in the past and are looking to retire your current system, it’s important to find software that integrates with your other programs. Purchasing management software pays for itself as it allows you to streamline workflows, improve efficiency and automate your current process to control costs and help you increase sales and profit.

While there are many different types of software out there, you need to make sure that the system you choose allows for easy integration with applications and software you’re already using to create a seamless and automated purchase order process. If you already use QuickBooks to manage purchase orders and invoices, but are looking for more robust purchase order software that can create even more efficiently among your employees, the new purchase order software you use should be able to easily integrate with QuickBooks to improve workflow without disrupting the current system.

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