June 2023
The best way to please a customer is to deliver the goods in time. Delivering in time has multiple other benefits as well.
There is a strategy to be deployed in order to deliver quickly. It's a game of proper synchronisation. But depending upon the nature of business, the strategy to deliver quickly varies.
Each department has a role to play in the strategy to deliver quickly. In this article we will discuss how Purchase department can contribute towards faster deliveries and how to make optimum use of OurSys ERP for the same.
Let us discuss two extreme scenarios. The Make-to-Order scenario and the Ancillary Scenario.
In Make-to-order companies, there are changes in design for each order. In such a scenario, very few items such as hardware are stocked and most items are bought as required.
In case of products with bigger assemblies, such as machines, the number of components is very high and is of wide variety. Owing to this, it is more economical to buy them rather than produce them inhouse. This makes the purchase process extremely critical and is normally the bottleneck. Hence making purchase department efficient goes a long way in reducing the delivery lead time.
Following features of OurSys can drastically reduce the purchasing effort and can save valuable time.
Design department may take 2-4 weeks or even more to finalise the exact Bill of Material. The MRP is usually run after the Bill of Material is approved and released. But with OurSys, designers can release bill of material partially and MRP can be run based on this. Thus purchasing activity of long lead time items can begin even before the Bill of Material is finalised. This feature is available with our Sales Order level Bill of Material option.
The MRP feature of OurSys considers total demand quantity based on Bill of Material, free unreseved stock, unreserved pipeline stock, reorder levels, Minimum Order Quantity and Economic Order Quantity to accurately calculate the purchase requisition quantity. This ensures all required items are bought and saves weeks of efforts cutting the overall leadtime drastically.
Users can quickly convert PRs to POs in OurSys. Multiple items on PR, being supplied by a given supplier can be selected in one go to create PO quickly along with proper terms & conditions
With OurSys AI insights, even a novice can generate orders without flaws and at the right rates. OurSys has multiple built-in check points to ensure that the right supplier is given the order at the right rate.
OurSys also checks whether the selected supplier is overloaded with previous orders. This helps to cut down on the probable delay that would have been caused due to overloaded supplier.
Once PO is approved and generated, PO can be sent by email directly from OurSys as a pdf attachment
OurSys's supplier interface further cuts down on communication delays and mistakes. The supplier can see his PO in real time and acknowledge the receipt of the PO ensuring that the PO had reached the supplier. OurSys even has a manual provision to mark as "Acknowledged" by the supplier
Purchase officers can see the goods in transit as the suppliers prepare ASN in OurSys. ASN also helps to quickly generate the GRN once the goods are received. Huge amount of time is saved here as well.
Many companies certify certain suppliers as Direct-to-line suppliers. OurSys provides Inspection waivers for such suppliers saving time of inspection data entry.
These were some of the major strategies. There are more smaller tricks and features which our users have discovered. Sometimes even we are taken by surprise by the ingenuity of the users.
Ancillary companies supplying components to OEMs have to work with clock work precision. All the activities have to be synchronised in order to have a healthy schedule vs supply ratio with acceptable rejection ppm levels.
Here, if a schedule is not met, the opportunity to sell is usually lost as the schedule is automatically cancelled every month end.
In such companies, the drawings, item codes, processes, suppliers etc are all set and fixed before hand.
Considering this scenario, OurSys has a strategy for purchasing
Here purchase department has to adopt the fixed period purchase system. Purchase officers can fix the frequency of purchase based on the category of the items. Items with high value & low lead time are stocked lesser and bought as required as compared to items with low price or long lead times.
So, at the time of purchase, whichever items have gone below the reorder level have to be ordered. OurSys allows to pull in items below reorder level directly into purchase orders in one go.
When MRP is run, it not only checks the demand for items on order but also for items below reorder level. Since most items have reorder levels and are purchased periodically, the overall shortfall is lesser. Only items which are not to be stocked fall in the shorfall list.
Economic Order Quantity (EOQ) is the order quantity that minimises the total holding costs and ordering costs in inventory management. In OurSys, during MRP run, the EOQ is automatically selected unless the supplier's minimum order quantity is higher. This ensures optimum inventory costs.
Many a items there are repeat orders. OurSys allows to copy an existing old Purchase Order and then allows modifications to it. This also saves lot of effort and time.
This is an unique feature of OurSys wherein OurSys guides, alerts and warns users so as to buy in the best possible way and avoid mistakes. This again helps in cutting down the purchasing time.
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