Purchase Order Processing Cost Reduction
We recently performed an exercise to see how we could cut costs in our purchasing department it turned out that it was costing us about $41 for every purchase order that we issued out of our business we felt there had to be a better way to handle this so we looked to automation via software.
We reviewed the flow of data through our business and discovered bottle necks both in the approvals process and in the communications with our vendors. After suitable study we searched the purchasing software marketplace for a tool that could ease the issues we were facing. We found numerous purchasing software tools, and some were clearly not up to the task but one or two did rise above the rest in terms of functionality and cost benefit.
The purchasing software system we chose, called eProProcure (from Mikrofax eProcurement Solutions) had a unique approval routing method for cost control plus a sanity check step so that all our line managers suddenly had self control of their budgets they could see at a glance what they had spent to date and what was left of their budget to still spend.
Our Finance director and Chef Exec quickly saw the benefits and liked that a lot ! Plus there was a much closer audit of who was doing what on the system and our compliance department loved that ! But an interesting added benefit that we hadnt anticipated was that our vendors were much happier as they could now both get their orders and update our prices on-line into our database directly this meant we were despatching our orders in a timely fashion due to the web delivery model but also more accurate orders were going out due to the figures always being right on the internal catalogs.
Our cost for raising an order has shrunk to about .10 cents and the turnaround time has dropped; all in all a win-win situation.
Tags: accounts, business, Finance, procurement, purchasing software
Posted in Finance
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