Purchase Proposals

Purchasing has always been the poor relative of sales in any business software solution. Some of our customers were suffering from the same problems before installing Openda QX.

Purchase Orders are usually raised as a response to one of the following scenarios:
- On the back of a sales order to fulfil a customers requirement.
- When the Warehouse team notices that the fastest moving or longest lead time stock item is running dangerously low.
- When the Purchasing team run their reports to see what stock has hit the static re-order point within the system.

And what inefficiencies do these scenarios cause;

Increased costs - Multiple purchase orders can be raised to one supplier incurring multiple delivery charges and minimum order charges.
Poor customer service and potential lost revenue - Customers are kept waiting for orders or may take their business elsewhere if the product they want isn’t in stock when it should be.
Poor cash flow - Cash can be tied up in stock sat on shelves because the purchasing reports run on nothing but a minimum stock level / re-order point.
Lost sales - The right stock isn’t in stock for your sales team to sell.

So why is QX different from other packages when it comes to purchasing?

We identified the major problem with most purchasing solutions was that they calculated suggested purchase orders on either a static re-order level, minimum order quantity or the average last 3 months sales history and this is restrictive and inflexible especially when different types of products may have different purchase cycles.

Taking these points into consideration, we developed a purchase proposal tool which looks at the following parameters and calculates what stock you should be purchasing.

- Average of actual sales based over a period defined by you. This can also take into consideration the number of working days in a month if you wish.

- Number of months demand you wish to hold.

- Any seasonal weightings that may apply to a product.

- Percentage (%) safety stock you may wish to hold.

- Lead time from your supplier.

- Pack sizes, if applicable to a product.

- Percentage (%) service level from your supplier i.e. if your supplier always delivers late a % service level can be applied to accommodate this, useful when importing goods from overseas with long lead times.

These parameters are definable by you, the operator and can be grouped and applied to ranges of products for quick and easy maintenance. These parameters don’t have to be set but when applied give more meaningful proposals.

So looking at how many months demand you want to hold, the lead time of the product, the service level against this lead time and the pack quantity, QX will calculate how much stock you should be ordering. QX can also take into account a % of demand you want to keep in stock as a safety stock and build this into the amount of stock to be purchased.

Naturally a proposal is only based on the information and parameters within the system so you can manipulate a proposal until you are happy with the result.

A proposal can be manipulated and regenerated to accommodate:

- Extra days stock – useful if the Purchaser is going on holiday and wants to make sure there are no stock shortages whilst they are away.
- Container Loads either by volume or weight – the system will regenerate a proposal based on the weight or volume of a container.
- Value – a proposal can be regenerated to meet a minimum order value.

Any regeneration will equate back to the number of days stock to be purchased giving you a realistic view of how much stock you will be buying.

QX can also alert you to the following scenarios for review; these can also be grouped and applied to different products:
- If an item is already on another proposal.
- If a line exceeds a maximum line value (specified by you).
- If a line exceeds a number of months demand (number of months specified by you).
- If stock will run out in the lead time.
- If a price could not be determined.

The alerts will not allow a purchase proposal to be confirmed and sent to the supplier until they have been reviewed and acknowledged. Purchase proposals can also be generated but then sent through to an authorisation stage if a purchaser has a order limit i.e. anything over £100,000 has to be authorised by another user, a manager or director.

Purchase Proposals can be split across buyers if you have different buyers dealing with different suppliers and notes can be added to a proposal for internal use, notes to the supplier or notes for the Goods Inward team.

You can also quickly look at other items purchased from this supplier that haven’t met the proposal parameters showing you how close they are to their re-order point as a percentage, an easy way of quickly seeing if there are any other items that would be worth adding to your proposal.

Once you are happy with a purchase proposal, at the click of a button it can be converted into a purchase order and faxed or emailed straight to the supplier.

What benefits have our customers seen from using this tool?

• Reduced the number of purchase orders being sent out of the company, saving time and money on carriage charges and in some cases, minimum order charges.
• Rationalised stock being held by only holding stock that is required, ultimately freeing up cash flow.
• Improved customer service through better accuracy of stock holding, cutting down on the number of customer orders not fulfilled due to lack of stock.
• Improved customer service due to stock being available even from suppliers that may have mis-guided delivery dates as this is taken into consideration with what safety stock is held.
• Time saved, as no lengthy reports to trawl through and then re-enter onto a purchase order.

Can your system offer you these benefits without lengthy and expensive development?