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Managing your Supply Chain
Part 2
In Part 1 of Managing your Supply Chain we focused on how
ERP software helps you better manage the “demand” side of
the supply chain. Now let’s look at the “supply” side.
Is One of your most important “supply” functions.
You can track all of the details against Purchase
Orders, such as pricing, quantities ordered and
received, and expected vs. actual delivery dates.
This data also lets you monitor supplier
performance.
Within Purchasing, Contract Pricing speeds up Purchase
Order(PO) entries and ensures accurate pricing. For each
supplier/SKU combination you can pre-configure parameters
such as price, expiry date, freight charges, shipping instructions
and more. When you enter a PO these contract parameters are
automatically passed to the PO.
For long term blanket contracts with committed
quantities and delivery schedules, Blanket
Purchase Orders makes your purchasing more
efficient and gives greater visibility. After you
setup the overall Blanket PO, the system
automatically suggests and creates individual
PO’s on a schedule to pull from the contract.
If your Purchasing requires an approval process, where some
users request items but others approve and create PO’s, then a
Requisition System is useful. Users can enter and track
requests, which automatically get forwarded for approvers to
review. You can set different value limits per approver. When
the PO is approved the original requestor is notified.
Some companies have supply chains
where certain trusted suppliers make
frequent deliveries, which works well
– except for all of the accompanying
administrative tasks, such as entering
supplier invoices and matching them
to PO receipts. By using an
Automatic Vouchering/Invoicing
feature you can eliminate these
manual steps. Essentially the system
automatically creates AP invoices to
the trusted supplier based on PO
receipts. This saves time for both you
and your supplier.
Drop-shipping to customers directly
from suppliers is common in many
Distribution companies. With an ERP
system you save time and reduce errors
by having the system automatically
create the PO from the sales order. The
PO can also pull in your customer’s
shipping address and link the PO to the
sales order, when you record the PO
receipt. This saves you a step by
automatically changing the sales order
status to “items shipped,
One of the most time-consuming aspects of Purchasing
occurs even before placing the PO. It’s figuring out what to
buy, and when. Many buyers use spreadsheets or other
simple systems to tediously plough through their SKU’s,
scrutinizing columns of data such as on hand quantity, open
sales orders, open PO’s, past sales, future forecasts, etc.
Based on this data, buyers
then do a “best guess”
calculation of what to order.
Does this sound
familiar?
An ERP’s Materials Requirements Planning (MRP) system can bring huge benefits and time-saving.
MRP is essentially a “big calculator” that crunches ALL of the supply and demand data (so that you don’t have to). Then it recommends a list of suggested new PO’s, and suggested actions on existing PO’s. You review the suggestions and click a button to automatically create new PO’s and
revise existing ones.
In addition, by ordering only the right inventory at the right time,
MRP helps reduce inventory levels (which frees up cash), and increase service levels to
customers (which increases revenue).
For manufacturers, Production is a critical
part of the supply chain. It’s important to
make the right products at the right time,
and to know your costs. But many
companies struggle to effectively manage
work orders. An ERP’s Work Orders/Jobs
system can help…
…When you open a job it automatically pulls
in both the quantities and costs of the
expected materials and labour. It also
schedules the start and delivery date based
on plant capacity. After you capture actual
materials and labour used on the job, you
can view any variances.
Jobs can be linked to PO’s and sales orders,
which saves time by eliminating some
manual steps. For example, when you
receive a PO linked to a job, the quantity
and cost are posted directly to the job,
instead of having to receive the goods into
general inventory and then post them to the
job. Similarly, when you receive a job linked
to a sales order, it automatically updates the
ship quantity on the sales order.
As with POs, MRP is a huge help in managing
jobs. It crunches all the supply and demand
data and recommends a list of new jobs
required and revisions to existing jobs.
Effectively managing the “demand” and
“supply” sides of the supply chain gives
your company a competitive advantage. If
you are having challenges managing your
supply chain, its worth looking into whether
an ERP system can help.
Canada
Tel: 604 451 8889
Toll Free: 1 888 259 6666
UK and Europe
Tel: +44 (0) 161 876 4498
A comprehensive guide, to the concepts,
techniques and technologies of SYSPRO
Supply Chain, inventory management and
optimization
