Purchase is an inevitable operation in every business. Whatever be the industry, the purchase has to be completed to start the business. In other words, the purchase is the basic element of a supply system, the major part of a business.
What is a purchase?
It is not at all complicated. It is the buying of a product or material from a person or a company. Purchase is made by paying money.
Purchase can be of different types including personal purchase, mercantile purchase, industrial purchase, institutionalized purchase.
Of these, the personal purchase, as the name indicates, is the purchase by a consumer or consumers for their personal use. Mercantile purchase is the purchase of goods by the retail units for resale. These kinds of purchases are usually made by the Point of Sale businesses.
Industrial Purchase: It can be termed as the purchase of goods or materials for industrial use. In this case, a buyer usually purchases a component, semi-finished product, or raw material and manufactures some other products using this and sells it as a different product. In the same way, the industrial units purchase machines and other instruments for their operation
Institutional purchase: Purchase of different items for use in the institution.
ERP for Purchase Management
Purchase is a complicated process when it comes to industrial purchase. Here, a buyer will have to take into account the details of vendors, the items supplied by the vendors, and the price of the products offered by the vendors. The price offered by different vendors for the same components or machines and the difference in the quality has to be analyzed by the buyer efficiently. This will ensure the availability of the best price. Besides, a buyer should also be able to manage purchase orders and agreements in an efficient way.
An ERP solution can tackle many issues faced by a buyer. IT will also help the buyer to engage in communication with different vendors and engage in negotiation. This will also help you to manage purchase operations in a systematic way.
Recording the purchased quantity and sending back damaged products can also be managed with ease. IT will also help you to complete all tasks based on your schedule and requirement. ERP will also help you to streamline all activities and make sure that the company has sufficient stock in the inventory.
Briefing it we can say that ERP tools can play an important role in managing different stages of the purchase. These stages include inviting quotation, managing purchase order, preparing purchase agreement, managing vendors and managing payment, etc.
Let us have a glimpse of how ERP tool can help purchase management
Purchase Order Management
Do you spend hours preparing purchase orders? It really is tiresome work that requires a lot of time if the process is done manually. You will have to collect the vendor details, generate purchase tracking numbers, fill in the order details, generate purchase history and interact with the vendor.
But with an ERP tool, all these processes become very simple. It helps you to manage all tasks in an automated manner. We just click and select the vendor details and the product quantity. Adding the price of the product as well as other details of the particular item can be done easily. The process can be managed based on the inventory levels. ERP tool has the capacity to assist you in adding more order lines and manage vendors. We can set the delivery duration as well. Order tracking and return also become easy if we are using an ERP tool to manage the operations.
Order confirmation and quantity management also become effortless with this tool. We also get assistance for tax calculation and receipt date management. Some of the ERP tools even support you to seek the confirmation of the vendor.
Efficient Purchase Agreement Generation
When we are engaged in industrial purchasing we may need to engage in an agreement for a smooth partnership. For this, we will require the details of the purchasing representative and decide the type of agreement. We can also set an agreed deadline. An ERP tool can make all these processes simple and effortless.
Vendor Management
In the purchase process, we have two major partners. They are the buyers and the vendors. Hence, any purchase management requires efficient vendor support also.
This will help us save the details of different vendors and manage their phone numbers, website details, etc. The sale and purchase details, accounting statistics, partner assignments, etc. can also be managed easily.
Quotation Management
A purchase process in an industry begins when you invite quotations from the vendors. The quotation has to be invited with order deadline and other details. We can mention the quantity of the product required and other details. Managing manually these activities can certainly affect your sleep. But ERP can help you complete the tasks with a click.
Generate Reports
IF we are managing purchases manually we will have to spend days preparing reports. But with the ERP tool we can generate reports for different periods with a click. We can compare the purchase details for different periods and evaluate the receipt delay, untaxed total, etc. using the tool.
Key Benefits of ERP Tool
Improved buyer-seller relationship
To ensure timely delivery of quality materials, the buyer should be in touch with the vendor. There should be good bonding and proper monetary deals. Efficient communication between the two is also mandatory. With ERP solutions we can streamline all activities and ensure a better supply chain network.
Save time
ERP tools can certainly help you save your time by completing all the tasks within the shortest span of time. It helps to complete the documentation process quickly. Sending of orders and quotations, tracking activities and ensuring accurate deadlines can also be done in a way that the purchase team will not have to waste their time.
We have discussed the different aspects of ERP for purchase management. Besides, we can integrate the purchase management ERP with other ERP tools like sales and manufacturing enabling the easy linking of the supply chain network.