As an inventory manager or business owner, you’ll know that getting what you need to run your business is a fundamental process. When you make a purchasing decision, it has a direct influence on how you control and manage your inventory stock. Depending on what you order, it will impact your inventory levels and how you deal with your products in the warehouse. If you don’t stay on top of your inventory stock levels and purchases, you could end up with extra carrying costs and reactive inventory stock orders. Instead, make smarter inventory decisions through purchase management.
What is purchase management?
Purchase management is a procurement process where a business buys goods from external suppliers. There is a lot involved in the procurement process. A business needs to find suppliers to work with and to decide what items it wants and what prices it will buy them for; this stage often involves negotiation.
Purchase management streamlines the ordering, receipting, reviewing and approval of all items from external suppliers. Purchase management is also used as a tool to keep in contact with suppliers and build relationships.
Why does your business need purchase management?
Purchase management is a powerful tool that lets helps your business stay competitive and realise profits. When you can control costs through the purchasing component of your business, you can compete more effectively in your market. You can sell and distribute your products at a better price to your customers. Through the procurement process, you can lock in prices on bulk orders for extended periods of time. With these steady prices, you can leverage this against competitors and increase margins to gain more profits.
A few of the benefits of purchase management
Better supplier relationships
With a purchase management system, you can get to know your key suppliers very well. You build relationships with them throughout the purchasing process and you both get to know each other’s businesses better. Through this journey, you can rely on each other and reach out when you need a favour. If you run out of inventory stock due to unprecedented demand, a good supplier relationship might come in handy. The supplier will better understand your needs. With this, you can work on maintaining the best prices and service.
Streamlining your purchasing activities through a centralised portal can keep shelves stocked and employees informed. When your purchase management is collated into one system, you can see what’s low and what needs to be reordered. This way you can see inventory levels, purchasing options and costs instantly. It will give you a better understanding of your business’ profitability.
Discover well-performing suppliers
Do you know who your best suppliers are? With better purchase management, you’ll be able to find out which supplier delivers the best value, ships things in full and on time and more.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.