Automating Purchase Management with ERP for constructions
In the fast-paced, globalised world of today, you need a solution such as ERP for constructions to take care of your purchase management. Slow purchase order processes can affect your business and impact your profitability.
Let’s take a closer look at how purchase management works in the construction industry and the ways purchase automation can benefit your business.
Significance of purchase management in construction
If you are an experienced construction management company, you will be having a purchase policy in place. For small businesses where purchase is managed by a single purchase manager, the complications are less. The reason is there are not too many people involved in the purchase process and projects are less.
However, for an organisation with multiple projects, there is a purchase process for ordering, buying and receiving materials. The purchase department determines the quantity and quality of materials to be purchased. They maintain the records and perform quality checks as per the organisation’s policies.
The purchase team is critical for smooth operations in a construction business. If material of the required quality does not reach the work site on time, then workflow is affected. Workers may not have the sufficient materials to start the work or complete the work on time.
If workers do not have materials, they will be serving idle time on the site which adds to the loss of time and money for the business.
Different aspects of purchase management in construction
Generally, the purchase management process in construction-based businesses involves the following aspects:
- Purchase Order
Materials, machinery and other resources are required by various teams in a construction business on a regular basis. Bigger the size of the business more will be the consumption of resources. Imagine if every team’s request for resources is immediately approved without a control system in place.
The entire business will soon be financially unstable. To avoid such a situation, the purchase team evaluates the request and releases a purchase order. The purchase order is an extremely important document for an organisation as it is the official confirmation with the quality and quantity of purchase to be made.
- PO Creation
Although a team has requirement of resources, the approval manager or a team of managers verify the requirement and approve the quantity. If changes are to be made, the approval manager/s modify the quantity and quality before approval and send it to the purchase team.
Earlier, the Purchase Order (PO) creation was a long and tedious process. To and fro of documents led to wastage of time. Also, purchase orders were created using document processing software such as Word or Excel. With the best software for contractors, the whole process got automated.
Every relevant person on the team gets updated with the status of the requirement and approval. Nobody has to follow-up or run from one department to another to get the work done. If the purchase is pending then the platform clearly indicates the stage of approval. Notifications help the team members to review the purchase-related tasks that are pending for the user.
Once all the approvals are done, the purchase team can generate the order automatically on a document with the company’s branding. Secure digital signatures can be used for document approvals.
- PO Dispatch
Many companies still use emails to send out purchase orders to vendors. With an automated ERP platform, the purchase order can be mailed automatically on approval. But another critical feature in an ERP is the vendor portal.
Vendors can submit quotations, receive purchase orders and manage invoices through the vendor portal. What this means is, the purchase teams do not have to keep mailing the PO to multiple vendors again and again. If there is a requirement, the selected vendors can be given access to a vendor portal.
Also, vendors can bid for new requirements. The ERP dashboard can be used to see a quote comparison and analysis by the purchase team. Once the quote is approved, the PO order is created after necessary approvals.
For repeat orders, the automated approval process in the organisation can be used to generate more purchase orders. Here, the best part is every purchase from a vendor can be easily accessed by the purchase team with the status of their payment.
- Record Keeping and Matching
A purchase order is extremely essential until it is closed after the delivery of materials and the release of payments. In case there is any dispute related to the quantity or quality of the products purchased from a vendor, the PO is considered the legal document of the actual purchase.
Also, compliance and quality check teams access the PO for verifying the quality and quantity of the materials. An ERP creates the material receipt notes and monitors the movement of the materials ahead in the process.
To automate your purchase management, you can consider a solution that is among the best construction management software in the market. OMNI ERP is an integrated solution with flexible modules for managing purchase and other areas of your business.
For more information on OMNI ERP, contact ____________