Unlike what many entrepreneurs have done in their businesses, Purchasing Management cannot prioritize price over what is best for the company. Making it effective is about much more than just saving money.
The requirements that determine what is "best for the company" can vary depending on the industry, location, structure, and market. Therefore, without ranking them by importance, we have compiled the main tips for improving Purchasing Management.
Supplier selection
A very common mistake, especially in Brazil, is choosing suppliers based solely on price, ignoring product quality. When selecting the best supplier, it's important to consider the following points:
Solution: the one that presents the best technical solution to the problem, taking into account durability, usability, best visual appearance, side effects, etc.
Meeting the need: the one that best fulfills the company's needs, taking into account satisfaction, delivery time, reliability, and punctuality.
Financial suitability: the supplier's payment terms that best fit the company's cash flow, through installments and deadlines.
Price: the last aspect to be considered is the lowest price. In fact, ideally this should only be a tie-breaker, when all other criteria are equal.
Quantitative and financial dimension
Calculating the correct quantity to purchase of each product or raw material is fundamental in Purchasing Management.
If the quantity purchased is less than what is needed, it creates commercial problems due to lack of stock, which leads to customer dissatisfaction and complaints, and difficulties in production, causing problems with delivery times, increased costs, etc.
When the quantity purchased is greater than what is needed, we have the opposite problem: idle inventory is a loss of money. If the amount of idle money is too high, it causes an imbalance in cash flow.
The quantity purchased also affects the cost of transportation, storage, warehouse space, product expiration, etc.
Reducing purchase lead time
Reducing the purchase lead time means decreasing the time interval between the purchase request and the availability of the material.
Two key points for reducing purchasing lead time are supplier selection and improving the management of the purchasing process, ensuring that all information is kept up-to-date, all processes are monitored, and preventive measures are taken to avoid problems.
Implementing a purchasing system greatly helps reduce lead time by optimizing processes. Time-consuming and error-prone operational tasks are virtually eliminated through process automation and control.
How do I implement all these tips?
In corporate terms, the solution lies in using information technology to automate processes, reducing errors and dependence on the human factor.
An Enterprise Resource Planning (ERP) system is ideal for eliminating errors and duplication of information throughout the company. Its benefits for Purchasing Management are enormous and extend beyond this area, unifying and automating all business processes across all sectors.
Used by the fastest-growing companies in the world, this system brings much greater security to the business, significantly helps in saving resources, increases productivity, and adapts to and actively contributes to business growth.
A cloud-based ERP is essential for companies that want to remain competitive, ensuring that business decisions are based on real data and not guesswork.
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