In many companies purchasing runs on email, phone calls and spreadsheets. Things get bought, but the answers to who asked for what and when, who approved it and why this supplier was chosen are lost, and budget overruns only appear at month end.
Steps of an end-to-end flow
- Request: The department enters the need with a reason, quantity and need-by date, and sees the remaining department budget as it does.
- Approval: An approval chain defined by amount, category and department kicks in, and approvers are notified on mobile.
- Quotation: Quotes are requested from suppliers and compared side by side by price, lead time and terms, with the reason for the choice recorded.
- Order: A purchase order is created from the selected quote and passed to the ERP.
- Receipt and invoice: Deliveries are matched to orders and invoices to deliveries, so differences are seen before closing.
Designing approval rules
- Keep the number of rules small; sending every request to the general manager creates a bottleneck.
- Set amount thresholds by category: consumables and capital purchases should not follow the same rule.
- Set a time limit for approvals and send reminders when they are late.
- Define delegates so an absent manager does not stop the process.
Measuring supplier performance
When on-time delivery and quality are recorded at every receipt, supplier selection rests on past performance as well as price.
Nitrogen's purchasing management system builds this flow on top of Mikro ERP: goods receipt can be done by barcode with Nitrogen PDA, and approval notifications are sent with Nitrogen NTF.
