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What is Automated Purchasing?
Automated purchasing is a function of an ERP software system typically found within a manufacturing business to reduce error, time spent on making purchases, and to increase profitability.
The most successful manufacturers rely on automated purchasing to know when to buy parts and in what quantity. The guessing game disappears, and the manufacturer can spend most of their time improving price and delivery, decreasing inventory, and reducing obsolescence.
Most companies spend countless hours just managing purchasing and will end up leaking a lot of unnecessary profits because of mismanagement or inefficient processes. Implementing an automated purchasing process starts with understanding the needs, wants and requirements of your organization.
“Global Shop Solutions’ Auto Purchasing has reduced our inventory from $1.5 million to about $400,000.”
– Mike Kelly, IT Manager, Arcadia Manufacturing
Through the use of three ERP software features, manufacturing companies are capable of simplifying their purchasing system and cutting costs by as much as 4%:
- Automated Purchasing. Automated Purchasing works by generating a list of materials needed to purchase overall or through a cutoff date. Users can purchase based on requirements and/or reorder points, and quickly identify the best price by checking vendor quotes and purchase history.
- Blanket Purchase Orders. By creating blanket purchase orders, you can lock in the best price with a vendor. Automated Purchasing also create releases against the blanket every time the material is purchased. From a single screen, users can determine the status of each order and tell immediately if it is in inspection, received, if the order is opened, closed, etc.
- Purchasing Action Required. When work orders are rescheduled or customers change due dates, purchase order dates and required quantities can change. The Purchasing Action Required screen shows purchasing agents all of the modifications required to keep the jobs on schedule.
Using these three features with the simplicity of seeing it all in one screen in their ERP software, makes a manufacturer the master of inventory – not the other way around. Manufacturing companies that use automated purchasing will find it positively impacts revenue by making the right purchases at the right time based on your manufacturing schedule.
Automated purchasing is just one of the 10 must do’s for small- to medium-sized manufacturers. Want to learn what the other nine are? Download our 10 Must Do’s for Small- to Medium-Sized Manufacturers whitepaper.