With the U.S. economy still struggling to break out of a recession, companies are looking at every aspect of their businesses to find ways to operate smarter and more efficiently. One area that frequently comes under intense scrutiny is purchasing. Efficiencies gained in purchasing come from reducing overhead administrative costs and product costs resulting in cutting the cost of sales. This allows sales managers to compete more effectively on price without reducing profit margin.

By tapping into a fully integrated system, buyers have a full view of on hand inventory, as well as what is scheduled for sales or due in from vendors. Advanced systems can even forecast what future inventory demand will be so that stock levels will be minimized, but still adequate enough to fill orders and retain customers. Whether re-ordering based on minimum stock levels or comprehensive economic order quantity (EOQ) calculations, buyers are having a greater impact on inventory carrying costs – and the financial performance of a company. And because the systems perform the calculations and automatically generate purchase orders, fewer buyers are required.

Inventory planners can now rely on integrated systems to provide accurate on-hand balances, as well as track sales history and future sales pipeline data to determine optimal stock levels. Access to this information has never been easier, as reports can be made available online to remote or work-at-home employees. Busy executives can rest assured they will meet customer demand with Web-based dashboards to review fast-selling products, current stock levels and on-order quantities. Systems can even scan their own databases for important events and send e-mails or pager notifications to the appropriate employee so that they can take immediate action to avert stock outs, transfer product, or check on an unusually large purchase or payment. If the sales department is waiting for an out of stock item to come in, the system will let them know as soon as it is received. Before these activities were automated, the salesperson would have asked the purchasing agent to let them know when a hot item came in, and receiving would have to remember to call the buyer. What was an archaic, reactive, and disruptive communication process is now consistently and quickly handled by the system - proactively.

Maximizing Systems Investment
Most gains in purchasing efficiency rest on a foundation that is based on the selection and utilization of systems that can automate routine processes and provide analytical insight into business decisions. A fully integrated business management system ensures not only that the distribution backbone of a business runs efficiently, but also that employees are making sound financial decisions in the purchasing process. Successful companies realize the added value that buyers provided a generation ago — such as knowledge of product turnover, vendor lead times, and safety stock levels — can be shared throughout the organization via system automation. Moreover, a business management system can track this data with more accuracy, speed, and objectivity. The return on investment includes lower carrying costs, more inventory turns, and better customer service.