Article
January 2024
Purchase Best Practices
Purchasing is a critical process and depending upon how it is done it can affect margins drastically. Here is a list of Best Practices for Purchase.
Recommended best practices for Purchase
Requisition based Purchase
Purchase Requisition is either generated automatically by OurSys MRP or it is created by the end user department requiring the material. The requisitions are then duly approved before purchase orders can be raised.
Thus Purchase Requisition serves as a justification for purchase and avoids excess purchasing.
OurSys has a setting to make requisitions either mandatory or optional.
It is recommended that the Purchase Requisitions must be made mandatory.
Reviewing Supplier Performance
OurSys automatically rates suppliers based on quality and on-time delivery. It is important to review the performances of all the suppliers periodically.
If the score is low, the suppliers have to be alerted. If there is no improvement, it is wise to find a replacement. Reliability of the suppliers is key to our own ontime delivery.
It has a direct impact on customer satisfaction and thus the revenue as well.
Conducting Supplier Evaluations
OurSys has the provision to mark Suppliers as Approved suppliers. You must then use Task template to remind sourcing officers to evaluate the suppliers periodically.
Their evaluation reports must be uploaded in the uploads section of the supplier master. This will improve reliability and avoid sudden disruptions in supply or quality.
Using Supplier Interface
Using Supplier interface can cut down a huge amount of communication time and also the time spent in generating Goods Receipt Notes. OurSys Supplier Interface comes with the facility to generate Advance Shipment Notice (ASN) which can be simply scanned to create GRNs.
Setting Reorder levels correctly
For running items, reorder level must be calculated by multiplying typical leadtime for that item with consumption rate. A safety factor must be added in terms of days to the leadtime for realistic Re-order level.
Setting the reorder levels correctly for all running items, reduces the load on purchasing drastically.
Having alternate supplier options
OurSys alerts the purchase officer if a particular item is being repeatedly bought from the same supplier. It is recommended to have alternate suppliers to avoid supply disruptions and to get competitive rates.
Reviewing business given to suppliers
The number of items and the value of total purchase made from various suppliers are available in the Supplier wise Item purchase report of OurSys. This can help you identify skew, if any, towards a particular supplier and also negotiate better with the suppliers based on the value of business given.
Closing old Purchase Requisitions
Old irrelevant requisitions in the system can render MRP and other related MIS reports useless. Thus it is important to identify old active requisitions and close them if not relevant.
OurSys helps to quickly identify such requisitions and close them.
Closing old Purchase Orders
Similary old Purchase open purchase orders can be identified and closed quickly in OurSys.
Using MRP for Requisitions
For bill of material based items, purchase requisitions must be generated using MRP only. This will avoid excess purchases and material requirements will not be missed.
Setting up correct EOQs & MOQs
Minimum Order Quantity is the minimum quantity that a supplier is willing to supply and Economic Order Quantity is the optimum quantity that should be bought to have minimum inventory carrying cost.
Once these figures are set correctly, the MRP will keep ordering optimum quantities. OurSys alerts the purchase officer if the quantity is less than the EOQ or MOQ while raising a Purchase Order.
Using Cost estimation for determining correct price
In case of buying manufactured items as per drawing, OurSys helps you to estimate the expected cost considering material cost and process cost. This helps to justify the purchase price.
Sending Inspection Reports by email
GRN & Inspection reports must be sent by email to the suppliers. This will not only communicate about rejections in real time but will also save purchase officers time of communication. OurSys has the facility to email GRN cum inspection report directly from the system.
Paying attention to OurSys Insights
OurSys purchase order transaction comes with lot of insights. OurSys checks for multiple factors and alerts the user. The purchase officer must read these insights and act accordingly.
This will avoid wrong rates and delay in deliveries and will also ensure choice of correct supplier.
We hope these tips help you to streamline Purchase so as to have minumum inventory, better ontime deliveries to customers, better reliability, minimum rates, deskill purchasing and have a stress free purchase department.
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