In the fast-paced, globalised world
of today, you need a solution such as ERPfor 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.
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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
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