Procurement is considered as a core component of a company’s corporate strategy as several core business functions are related to procurement.
Procurement includes a series of processes that are required for an enterprise to acquire the required products or services from the suppliers at the best available price. Proper procurement management is crucial for an organization, as without this they can end up spending well over half of its revenue on purchasing goods and services. Even a financially strong company can sink due to lack of strategic decisions in procurement. It is needed to simplify the procurement process as the slightest decrease in purchasing costs can have a significant direct impact on profits.
ERP software simplifies your procurement process by providing the following features:
1. Purchase orders
This document is the core of procurement. It is a request to deliver something within a time constraint. This should be common for every ERP system. Every ERP purchase order is broken down to include a PO Line, each line refers to a single specific item and releases where multiple delivery dates can be specified.
2. E-payment support
Often procurement is completed without a purchase order. E-payment is quick and easy and avoids the necessity of establishing credit between the parties for a single purchase. ERP manages these transactions directly through financial processes where the general ledger account is posted without a purchase order receipt. Some can even process the payment clearing through integrations with payment processors.
3. Contract management
The importance of contract management within an ERP procurement module comes down to ERP’s role as the financial hub of the business. With accounts payable and receivable integrated with contract management, missed deadlines or milestones should be a thing of the past.
4. Supplier audits
Procurement includes supplier audits and ERP should support quality assurance at the same time it supports procurement. We can expect quality assurance to be used by the supplier and performance verification will ensure something is made or supplied in the way we want. An audit, generated by ERP, from purchasing, engineering, and quality personnel can verify our expectations are met.
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