Purchasing Systems – Ways To Manage Your Purchasing Functions

Purchasing systems are ways for companies to efficiently purchase goods and services at optimum terms and the best prices. Many companies use computerized purchasing systems and even the smallest company can find a software program that will manage the more common elements that are found in the more complex purchasing systems.

You would expect the most basic purchasing systems to have the following functionality:

  • Automatic generation of purchase orders.
  • Managing order requisitions.
  • Managing received orders.
  • Invoice management.
  • Management of price variances – usually by report production of anomalies
  • Keeping lists of suppliers.
  • Payment of vendors invoices either by printing cheques or by inter-bank transfer or BACs.
  • Provision of financial reports that can be used to update the company’s general ledger.
  • Forecasting future spending which helps with budgeting.
  • Providing management information on spend to date, spend per product and spend per supplier.

More complex purchasing systems would also provide extra functions such as:

  • Automatic ordering of the standard orders.
  • Master Agreement production and management.
  • Linkage to your accountancy systems so that purchases are automatically entered into your purchase ledger and balanced against your bank account.
  • Automatic updating of the current stock levels.  This is particularly useful in a restaurant and retail environment.
  • The ability to order electronically, thus allowing for paperless ordering.
  • Management of supplier contracts.
  • Maintenance of supplier catalogues allowing the company to "pick" products as they need them.
  • Vendor rating so that you can manage the quality of the suppliers you are using.
  • Managing a tendering process from writing the RFP (request for proposal) through evaluating the responses to awarding the contract.
  • Much more complex and interactive management and financial information that can drilled down into.

As you can see a company’s purchasing systems be they large or small can be easily computerized.  This ensures that there is less staff to employ and manage. Those staff that you do have can be utilised in obtaining the best purchasing terms possible, managing the ad hoc purchase activities and analysing the management information that these powerful systems can produce.

Of the features that are available the maintenance on inventory levels and the integration with accounting systems must be the most valuable as they reduce mistakes and speed up the company’s financial management.  This is why big box software suppliers like Oracle and SAP are so popular with international and blue chip companies.  They integrate all the financial and management functions of a company.

 

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