Streamlined Purchasing Through Automated Demand Driven Functions
Why take ten steps to do something, when you can do the same thing in two? It seems such simple logic, yet in manufacturing today there are still some companies that insist on maintaining the old, anachronistic, handwritten ways of purchasing material for the shop.
However, to overcome deficiencies found in the old paper-based ways of purchasing, manufacturers are now utilizing enterprise resource planning (ERP) software systems that employ autopurchasing modules that meet the needs for speed (and savings) in the manufacturing operation.
Such autopurchasing modules read the inventory system, scanning the inventory master for every part and looks for opportunities to both refresh inventory and take advantage of quantity discounts.
Many manufacturers have taken to heart the notion of demand driven purchasing whereby raw material/parts acquisition is a result of orders pulled from the client. That is to say, in lean enterprises requisitions are made not from forecasting models, but immediately as a result of sales orders being submitted, or as a result of established inventory minimum thresholds being met. In either case, demand driven means that purchase is a result of job sequencing—quotes generate sales orders which generate work orders which generate material demand either to the job or to inventory.
To facilitate this just-in-time process (JIT), it is imperative that there be immediate and constant real-time data flowing throughout the operation; a system flow where everyone is functioning in concert and on the same page. To this end, ERP software systems with graphical user interfaces (GUIs) have come to incorporate the older method of requisitioning and purchasing—materials requirement planning (MRP)—into their functions. In doing so, the ERP software can automatically convert the requisition into a purchase order.
In ERP systems, especially those using GUI terminals throughout the plant, personnel are able to view and input data immediately as it becomes available. For the purchasing manager (or agent), this means their work is made that much easier by having easy access to historical purchasing data, including requests for quotes to vendors. For the purchasing manager, there is no longer the need for waiting while requisitions make their (slow) way through the various approval hierarchies within the plant before purchase decisions are made.
Instead, all shop personnel have the ability to see the same requisition data immediately and in real-time, and to make approval decisions online and instantly. This efficiency gain in the streamlined automated purchasing process means shops run leaner and in a demand-drive purchasing environment. In other words, for the purchasing manager in an ERP systems environment, automated purchasing provides a “one-stop shopping” operation where many steps in the process have been distilled down to just one or two.
The results? A streamlined purchasing process and a greater ability for the manufacturer to stay on schedule and run leaner with regards to JIT inventory maintenance.