The Resource Group

Is Procurement Your Friend or Enemy?

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How does the procurement department rate within your business enterprise?  If your sales teams are by-passing procurement to get what they need from other managers, then you may be short-changing your profitability.  Procurement could be one line of defense against paying too much for the products you pass along to customers.

In some businesses, sales managers may try to bypass the procurement team to develop a separate relationship with a supplier.  Going around procurement can create a variety of issues, particularly financial ones surrounding the delicate balance of inventory control.  Your procurement team generally has more information than other managers may have in regard to inventory supply, customer demand, supplier relationships, and insight on the strategy of placing orders.  The key here is the strategy behind placing orders.  Procurement strives to purchase the right amount of inventory – from the best suppliers, at the right time – in order to protect cash flow and maximize profits.   

Many of today’s powerful enterprise resource planning (ERP) solutions include inventory and supply chain management functionality.  These tools provide your procurement team with the control and insight to keep your warehouse stocked with enough inventory to satisfy customer orders.  A robust ERP solution, such as Microsoft Dynamics® GP, offers dashboards that highlight metrics often used in forecasting and demand planning.  These dashboards can also be used to monitor inventory by warehouse, if you have multiple facilities. 

When managers go around procurement to make inventory purchases, they are impacting carefully set plans.  You may already have the items that they plan to order in one of your warehouses and buying more would be a waste of money.  The supplier they want to use may not meet quality standards or have prices that are higher than the suppliers you usually use, another waste of money.  Integrated solutions, like Microsoft Dynamics GP, will encourage your people to work closer together so when another manager finds a supplier they want to use, your procurement team can do their research and bring them into the fold if they meet corporate standards.

Procurement plays an important role in making sure you have the high-quality inventory that your customers demand at the right time and at the right price.  Contact The Resource Group for more information about empowering your procurement team with the right ERP solution to control inventory and profitability.

By The Resource Group, Washington Microsoft Dynamics GP Partner

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