You know the old saying about the left hand needing to know what the right hand is doing? It also applies to your organization’s automated buying processes. In order to realize the full benefits of your investment, it’s vital that all pieces of your system are well integrated, including a broad suite of e-procurement and asset management applications. Different types of purchasing activities can contrast sharply with one another, as each requires a specialized automated system to operate efficiently.
One category of purchasing that can benefit greatly from automation involves materials, supplies and components. Purchasing these materials is typically an ongoing process, has a lot of repetitive activities and involves relatively high volumes. Purchases also typically involve many documents in various forms, including purchase orders, invoices and contracts. Automating the handling of such activities and documents thus yields enormous efficiencies. The ideal way to accomplish this automation is through e-procurement software.
Integration is Key
Yet e-procurement software alone isn’t enough. The process of purchasing high-volume items is part of a complex set of interlocking activities. Often a need to track factors as diverse as the shelf life of products, the use of materials and supplies in jobs performed by employees, and the physical locations of thousands or millions of items also exists. Thus it is important to be able to integrate the software with a variety of other applications, including supply chain management, transportation management, inventory management, and invoice management. The more integrated these applications, the more effective all will be.
Another key purchasing activity quite different from the type that benefits from e-procurement software is the purchase of capital equipment, vehicles, fixed assets and the like. These purchases typically involve lower volumes of more expensive items, and they introduce an entirely new set of factors to track.
The most basic of these factors are cost, depreciation, warranties, maintenance and repairs. But it is also necessary to track and analyze a number of more complex factors, which can range from purchasing processes and policies, supplier relationships and budgeting, to usage patterns and productivity of the assets involved. A company must also track these items’ obsolescence and environmentally sound disposal. Purely physical factors like location, storage and theft protection also require tracking.
Asset Management Should be Linked to Transportation, Warehouse Management
Asset management applications are the ideal solution for handling all such tasks. But in this type of large-item purchasing, too, integration with other processes and applications is crucial: the most important ones being fixed asset management, transportation management and warehouse management.
One other type of integration is also critical, no matter whether the purchasing involves many less-expensive items or a few expensive ones. Business process management applications of all types need to work with more general business automation systems. These include enterprise resource planning (ERP) and general ledger software. They also need to integrate with various methods of keeping track of items large and small, including barcode and other scanning systems. In short, the need for – and benefits of – business process integration in increasing the efficiency of organizations is almost limitless.