Taking the Mick Out of Your Purchasing Process

Taking the Mick Out of Your Purchasing Process

The importance and benefits of a well structured purchasing process

In one of my previous roles, we had an odd job man called Mick who often had to buy bits and bobs to fix "this and that" around the company.


Most of what he spent was with reputable suppliers, but it was all paid out of petty cash and we were lucky if we saw the receipts. We just assumed that Mick was trustworthy and was getting the best value for money possible for the company.
 
If our company had had a more structured ordering process involving the use of Purchase Requisitions and Purchase Orders, Mick could have provided his line manager with a requisition detailing his list of nuts, bolts, bits and bobs (and where he was getting them from), which could have been approved and progressed to an order. The account could probably then have been settled via a monthly invoice, thereby reducing the need for Mick to carry cash.


Sage Enterprise Management purchase request IPad screen, click for larger image

Taking this further, if the "Bits and Bobs" budget was being monitored, then his manager could perhaps have been alerted to potential overspend and questioned whether these were really needed at all, or whether they could get them cheaper elsewhere, and possibly nipped the potential order in the bud.


Improving Your Procurement Processes 

 
In a not-very-scientific survey of Mysoft prospects in recent years, approximately 100% have indicated that they would be interested in the following when considering a new ERP solution:
 
  • Standardisation of processes to ensure more robust procedures across various departments;
  • Improved levels of control through using fully integrated business tools;
  • Transparency of data to enable better decision making.
 
In the area of Procurement, then, it's a wonder why more companies aren't interested in implementing a more formal Purchasing process like the one outlined above, often relying instead on tried and trusted paper based processes that usually start with a Purchase Order, may encourage over-spends and can in extreme cases also be a catalyst for fraud within their businesses.
 

Purchasing Process Within Sage Enterprise Management 

 
At the time, Mick was a bit "old school" as an odd job man, but nowadays he would probably be using an ERP solution like Sage Enterprise Management, where:
 
  • He could raise his own Purchase Requests using his phone, perhaps, with Requests automatically being sent for approval;
  • Budget controls could be put in place to prevent Requests from being added, unless Mick had the authority to exceed the budget;
  • Workflow emails could be sent to approvers with details of Requests so that these could then be approved (or rejected) from anywhere;
  • Purchase Orders could be raised based on details provided on Requests and PDFs generated for the suppliers involved, with all your Terms & Conditions included if necessary;
  • Budget holders would then have the ability to monitor overall spend - in real time, if required.

Purchase Request within Sage Enterprise Management on phone, click for larger image 
 
Mick could have been purchasing fixtures and fittings for the office, or alternatively stock for his van or warehouse - the Purchasing process outlined above works for both. For the latter, you could incorporate Purchase Requests into an MRP or Statistical Reordering process for additional control.
 
A formal Procurement process using Sage Enterprise Management allows you to standardise the way you purchase, add control and visibility to the process and also provide transparency regarding department and ultimately company spend, and that means that we're all a bit happier about how modern-day Mick's spending the company's money.

Sign up for our Finance Webinar and watch this functionality in action, within Sage Enterprise Management! Click here
 

Summary

Author:
Paul Mincer, Sage Enterprise Management Pre-sales Consultant
Date:
06/03/2019

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