3 Reasons to Include Procurement in Your Inventory Management Strategy
The three reasons a procurement management solution should be part of your inventory management solution & strategy.
by Salim Khalife, Founder & CEO
Increasingly, companies are recognizing that requisition, procurement and spend management solutions allow them to bring more spending under direct control, allowing them to boost buying power while simultaneously minimizing waste and driving efficiency. In addition, spend management solutions provide companies with visibility into the purchasing cycle that they just can’t get with manual or disconnected systems. Another area where spend management software is gaining traction, is when it is integrated with a company’s ERP solution and used as a tool to improve inventory and materials management. Just how can procurement and spend management software improve inventory management?
1. Speed and simplify internal fulfillment
Typically, when we think of requisitions, we think of them as the first step in the purchasing process. An employee recognizes the need for a product (or service) and creates a requisition to begin the approval, sourcing and purchasing cycle. But requisitions are equally useful when the requested products (or here again, services) are held internally.
Consider for example a busy medical practice that maintains an inventory of frequently used items in a central stock room. A nurse in the practice creates a requisition for bandages, which have been depleted on his cart. Since the requisition system is integrated with the practice’s ERP software, the requisition’s approver has full visibility into what’s on hand, what’s available (taking into account other requisitions and/or orders), and what’s on order and makes the decision to transfer the bandages from the stock room to the nurse’s facility for rapid delivery to the nurse. As the requisition is approved, the appropriate inventory transfer transactions are created in the inventory management software, ensuring proper accounting record. Expand this example to the scale of the entire practice, and it’s easy to see the efficiency gains realized over a manual, or disconnected requisition system.
2. Track purchase requests
By using the requisition software for internal fulfillment as well as purchasing, your company is building a history of where and by whom products are being used. Analyzing this information over time delivers insights into seasonal trends, anomalies, potential waste or misuse and resource prioritization.
3. Accurate replenishment
Integrating your requisition and procurement solution with your ERP provides the inventory management component of your ERP with access to pending and approved requisitions as it performs routine replenishment calculations, allowing it to make more accurate, informed recommendations for reordering inventory items.
Procurement and requisition software solutions are powerful tools for helping companies bring both direct and indirect spend under tighter control. By integrating the solution with your ERP and expanding its use to internal requisitions, you gain additional efficiencies and further insight into the entire spend cycle.
About the author:
Salim Khalife is the founder, president and CEO of Paramount WorkPlace, a technology company that develops, sells, and supports advanced web-based and mobile requisition, procurement, and expense software solutions for mid-market organizations. The company introduced its first cloud-based SaaS requisition application in 1997, and continues to innovate and expand its partnerships and integrations ever since. Learn more at www.paramountworkplace.com.