10 Ways to improve your purchasing department presentation from SAP Business One User Summit in Lake Lanier, GA October 2011.
Includes tips and tricks to help you better manage your purchasing department.
1. Long Business Systems, Inc. (LBSi)
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Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
2. Who am I: Keith Taylor
My background:
22 years of “hands on” purchasing and materials management
experience with a Cleveland, OH area manufacturer and distributor of
municipal and industrial truck mounted sewer cleaning equipment,
parts, and supplies.
16 plus years experience implementing business systems and helping
companies improve their efficiencies and bottom line through
Business Process Improvements.
Certified SAP Consultant all versions since 2004
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SAP Partner since 2004.
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
3. Ten Ways to Improve Your Purchasing Department
Agenda
1. Establish, monitor and follow Department Goals
2. CRM and now VRM
3. Requisitions / Purchase Request for Quotes
4. Purchase Orders
5. Purchase Order Acknowledgements
Slide 3
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
4. Ten Ways to Improve Your Purchasing Department
Agenda
6. Expediting of Past Due Purchase Orders
7. Vendor Managed Inventory (VMI)
8. Vendor Performance Reviews
9. Vendor Purchase History Analysis
10. Networking and Continued Education
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Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
5. Establish Department Goals
Some examples:
Cost Savings by buyer / product line or other measurement. Establish
measurable cost savings goals. Monitor and report on progress
monthly.
Vendor Reductions. The more vendors you maintain and use the
higher your costs.
Vendor on time delivery improvements.
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Vendor quality improvements
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
6. Establish Department Goals (continued)
Measure and track the goals:
If you are not utilizing a business software or your business software
does not provide tools to help you monitor and measure your goals
you probably will not meet your goals. Manual or antiquated methods
of tracking goals:
Excel or other spreadsheet tools
Word Processor
Many Software packages include methods and tools to allow you to
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easily monitor and track your department goals.
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
7. CRM and Now VRM
Are you utilizing VRM to run your purchasing and
materials management departments?
CRM (Customer Relationship Management) has been around for
several years. Many organizations utilize this to manage their prospect
and customer relationships but surprisingly we find that few
organizations incorporate methods to manage their relationships with
their vendors.
VRM (Vendor Relationship Management) can be used to effectively
keep track of vendor quality issues, expediting of purchase orders,
request for quotes and other every day purchasing functions.
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Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
8. VRM (Vendor Relationship Management)
Examples of manual methods:
Hand written notes on purchase orders pertaining to
expediting and other issues.
Keeping track of purchase order receipts by hand on the
purchase order.
Manual vendor correspondence concerning quality issues.
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Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
9. VRM (Vendor Relationship Management)
Methods to manage using a software solution:
Notes, documents, drawings, etc that can be attached
directly to purchase orders or vendor records so that they
are visible to all personnel.
Manual vendor correspondence concerning quality issues.
The benefits of including VRM in your business system are
huge as you have one source for all information that can
be viewed by all departments and users.
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Examples of some of the above in SAP Business One
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
10. Requisitions
Does your company utilize requisitions in their
day to day operations?
Requisitions are used by many companies to control and limit
purchases.
Sometimes used in conjunction with dollar amount restrictions:
Maximum per requestor
Approval limits by approver
Be consistent. What ever the polices and procedures say follow
them always.
Slide 10
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
11. Requisitions (continued)
When to use requisitions:
All materials, capital expenditures, expenses, and supplies
Only capital expenditures, expenses and supplies Manual
vendor correspondence concerning quality issues.
Again, be consistent and follow the company’s policies in all
cases
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Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
12. Requisitions (continued)
Manual Methods:
Hand written forms
Excel or Word Forms
Emails
Notes
Verbal
None – “we don’t have any controls in place and do not need them”
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Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
13. Requisitions (continued)
When incorporated within a Software solution:
Many software business systems include requisition capabilities
with functionality such as the following:
Users create their own requisitions
Ability to track and monitor open, in process, closed and
converted requisitions.
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Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
14. Requisitions (continued)
When incorporated within a Software solution:
Functionality (continued)
Easily convert requisitions to purchase orders
Ability to send requests for quotations to multiple
vendors
Examples of requisition capabilities utilizing SAP Business
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One
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
15. Purchase Request for Quotations
Manual Methods:
Hand written forms
Excel or Word Forms
Emails
Notes
Verbal
None – “I placed the order with the vendor I last purchased
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from”
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
16. Purchase Request For Quotations
When incorporated within a Software solution:
Many software business systems include purchase request for
quotation capabilities with functionality such as the following:
Users can create their own Request for Quotations
Ability to track, monitor, and convert Request for Quotations
to purchase orders
Ability to send Requests for Quotations to Multiple vendors
Example of Request for Quote generated by SAP Business
One
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Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
17. Purchase Orders
Purchase Orders are legal contracts with your vendors.
Should always be placed in writing. Verbal purchase
orders lead to errors or disputes as to what is being
purchased and the terms and conditions that apply.
Email
Fax
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Snail mail
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
18. Purchase Orders (continued)
Must be complete including:
Complete descriptive information for all items, supplies
and services requested including your company’s part
numbers, vendor part numbers, etc.
Include prices
Required delivery dates
Terms and conditions
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Examples in SAP Business One
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
19. Purchase Order Acknowledgements
Require your vendors to acknowledge receipt of your purchase orders
Track acknowledgements either manually or within your software
solution.
Manually this can be time consuming and is usually done by just
making notations on printed purchase orders
Utilizing a software solution to track acknowledgements
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Examples of purchase order acknowledgement capabilities in SAP
Business One
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
20. Expediting of Past Due Purchase Orders
Throughout my purchasing and materials management career this was
one of the most inefficient tasks to be conducted by purchasing and
sourcing departments. Many companies still struggle with this area on
a daily basis.
Many companies employ several “expeditors” whose sole jobs are
to verbally phone suppliers to check on the status of shipments that
are late or due to arrive.
Slide 20
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
21. Expediting of Past Due Purchase Orders
(continued)
The Hard Way:
Run the open purchase order report and highlight vendors to call.
Pull the “old hard copy” of the purchase order out of the file drawer and
call the vendor. While we have the hard copy on our desk let’s make
notes on it and then re-file the purchase order back in the file drawer.
Great concept but only the expeditor knows the details of the call and
only if he or she pulls the purchase order back out of the old file drawer.
Do nothing and wait until the shop floor, warehouse, customer service
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personnel, owner or your boss calls you to ask where the material is.
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
22. Expediting of Past Due Purchase Orders
The Pro-active (easy) way:
Some software business systems provide you with tools,
features and capabilities to easily perform this function without
adding personnel to the staff. In fact if properly setup, you can
actually reduce staff while maintaining better on time shipping
performance and customer satisfaction.
Think of how much more business you can realize from your
customers if you improved your on time delivery performance
from industry averages of 80% to more than 95% and above.
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Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
23. Expediting of Past Due Purchase Orders
The Pro-active (easy) way:
Sound hard?
Actually very easy by setting up alerts to notify buyers in
advance that purchase orders are either due to arrive or are
late.
Send notices to vendors regarding their late shipments
requesting responses via email
Update purchase orders with new delivery dates
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Let’s look at a simple late purchase order alert in SAP
Business One
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
24. Vendor Managed Inventory (VMI)
Once an unheard of concept Vendor Managed Inventory concepts are a great
way of reducing your inventories and cost of doing business.
Negotiate with your vendors to place their inventory in your facilities without
cost to you until you use it.
Benefits for you (the customer) include:
Improved cash flow
Lower cost of doing business – no need to constantly be checking with
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your vendor and placing purchase orders for the same materials over and
over again
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
25. Vendor Managed Inventory (VMI)
Benefits for you (the customer) include (continued):
No stock outages
Benefits to your vendor include:
a happy customer (You)
Less chance of you constantly shopping for a better price or a
different vendor.
Maybe you use those Purchase request for Quotations you
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learned about less often.
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
26. Vendor Performance Reviews
Conduct periodic performance reviews with your top vendors:
Areas should include:
Ease of doing business
Quality and Customer Service
On time delivery
Cost
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Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
27. Vendor Purchase History Analysis
Ability to track:
How many times an item or service is purchased over a
period of time
Dates
Quantities
Costs
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Detailed Purchase Information
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
28. Vendor Purchase History Analysis
Could you do a better job with vendor negotiations if
you had the ability to easily track and retrieve
information such as that listed above??
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Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
29. Vendor Purchase History Analysis (continued)
Many companies maintain this information in spreadsheets,
manual cards, or files or not at all.
The ability to easily track and retrieve this information from
your software solution can in many cases pay for the
software solution.
The following are some examples of how information such
as this is easily stored and maintained in SAP Business
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One.
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
30. Network and Continued Education
Network …. Network ….Network
Attend conferences like this SAP Business One User
Conference
Participate in local SAP Business One User Groups
Meet with your vendors and ask them for suggestions,
solutions and recommendations for other vendors.
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Meet with your peers and other professionals
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
31. Network and Continued Education (continued)
Network …. Network ….Network
Constantly be changing yourself. The way we are doing
business today is very different then when I began my
purchasing career back in 1973
Join local and national purchasing organizations such
as:
APICS (The association for Operations Management)
American Purchasing Society
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National Purchasing Association
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011
32. Long Business Systems, Inc. (LBSi)
A technology firm that helps companies run more
efficiently and become more productive.
Questions?
Keith Taylor, Vice President
email: keith@lbsi.com
Phone: 440-846-8500 ext 26
www.lbsi.com
Connect with me:
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Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 – 10/28/2011