Long, drawn out processes tie up employees’ time and company funds. The procurement process is one that involves multiple departments, each with their own multi-step processes that is often not reviewed for time and cost efficiency.
If you’re not sure what we mean, let’s follow a common purchase order route. Let’s first remember that the purchase order process begins when material is needed because it is not available, causing an employee to submit a request that often needs at least one level of approval. The purchasing department receives the request and begins contacting several suppliers for pricing and availability. Since this quoting process is dependent on suppliers’ response time, the purchasing process could be halted for a number of days before purchasing can finally place the order with the chosen supplier.
Once the delivery is accepted, the warehouse now checks the accuracy of the packing slip against the material that was delivered and enters the receipt into the system. The warehouse also needs to get the material to its final destination, whether it be stock to be put away or non-stock to be delivered to the requesting party’s location.
The packing slip is delivered to the accounting department who must reconcile it against the receipt and purchase order before an invoice can be created. Lastly, accounting enters the invoice into the system and processes the payment when it is due.
These steps cover the basic life of a purchase order, but think of all the additional time and effort that is needed when there is an error during any part of the process.
Not only is the process tedious and time-consuming, but the average cost to process a purchase order is between $75 and $150. This manual system causes your company to process 90 or more purchase orders per month!
The biggest flaw of this purchasing process is that it’s taking your employees’ time away from value-added activities and costing your business high hourly rates. With the help of an industrial vending system, you can enable automatic, plant-wide batch ordering. Typically, this works by signing a contract between the manufacturer and a few key suppliers and then adding those suppliers into your industrial vending system. The system batches all purchasing requirements and sends one purchase order electronically. Suppliers provide a consolidated bill at the end of the week or month, and you have cut down your company’s purchase order routine dramatically! A properly installed AutoCrib system will reduce purchase orders from 90 per month to 1 - 4 per month. This solution enables employees to be reassigned to more productive tasks, such as allowing purchasing agents to concentrate on negotiating better contracts on high-cost and high-use materials.
This inventory management solution not only reduces the number of purchase orders that are created per month, but it also automates the process for each department. Avoid the strain and expense of the purchasing journey by using a sophisticated inventory control system.
Remember, this is part six of a seven-part blog series on solutions that increase savings, efficiency, and productivity with industrial vending systems. Click here to go back to the first blog of this series about reducing consumption. Stay tuned for our next post about reducing crib trip times.
