Inventory Management Software

Procurement Software And Supply Chain Integration

Every business, whether involved in manufacturing, distribution, wholesaling or retailing and to an extent the service industries, are all part of the supply chain. If the chain breaks then supplies will dry up and potential profits will be lost, never to return.

Procurement software has been around for a long time, but only fairly recently did the smaller to medium sized companies begin to realize its importance and why it would be such a serious and worthwhile investment for their business.

So how does procurement software help a business to manage their stock replacement?

Imagine you were purchasing officer for a nationwide chain of furniture outlets. Your CEO and your financial management will not be slow in telling you that every square meter of retail floor space costs a lot of money to operate and needs to see a strong return in investment to justify all the pre-determined cost; sales staff, advertising costs, store upkeep etc.

Maybe twice of three times a year the purchasing team goes out to pick a new range for their stores. They only choose manufacturers who they known have sufficient manufacturing capability to meet the anticipated demands of their stores, and choose models accordingly. The purchasing officer might even back his judgement by placing some stock orders, but will generally trust the supplier's management to reserve his company with a share of their manufacturing capability each week or month.

When the model hits the sales floor and sales are as anticipated, the retail outlets' procurement software will automatically place and order for each item as it is sold. Not only will that it specify to the supplier/manufacturer to which depot to deliver, delivery time expected and any other relevant information.

Further down the supply chain, the furniture manufacturer will anticipate demand for their products not only from our friends in the retail furniture chain, but from a few others depending on the size of his manufacturing capacity. They will then place a series of programmed stock orders to meet anticipated demands. As the stock levels dwindle, the procurement software will receive a message to order specific components to meet demand in the near future, ensuring that the manufacturer is never short of any raw materials, and will be able to continue to produce.

This is how procurement software works in the supply chain and has made the whole process so much more streamlined that it was before it came on the scene.