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How to reduce purchasing costs with ERP

Every rand you save through your purchasing system goes directly to your company’s bottom line. Through accurate demand forecasting, better supplier discounts, and group-level purchasing, ERP software can help you reduce purchasing costs. Furthermore, with a wealth of information in real-time, you have access to reliable data that will empower you with the insight required to guide your purchasing cost reduction strategy.

Demand Forecasting

Through accurate demand forecasts, you can negotiate discounts from your suppliers upfront. More so, your purchasing team can identify items that offer the best dividends when discounted.

READ MORE ON ACCURATE DEMAND FORECASTS HERE

Discount received

A best-in-class ERP solution grants you access to multiple supplier discounts. These include quantity and value discounts that are awarded at the point of order, as well as retrospective discounts that are awarded based on your total spend over a period.

With an integrated inventory control system, your ERP can empower you with insight on low-value or low-usage items. Indeed, this is important when you negotiate discounts with suppliers. It enables you to avoid wasting time and effort and money, negotiating discounts on items that are not worth the effort. You can spot opportunities to gain even a small discount on high-value items.

how to reduce purchasing costs with erp

Furthermore, with Material Requirements Planning software, you can easily run your ABC analysis. Your finance department can run the analysis against the stock value to determine which items offer the highest revenue contribution. Your warehouse management team can analyze usage quantities to determine the ideal storage locations. Sales teams can analyze sales values to identify best-sellers. Most importantly, your purchasing team can analyze purchase values to identify the most expensive items to drive their discount negotiations.

how to reduce purchasing costs with erp software in 2021

Group-level purchasing

For businesses with multiple branches, ERP software facilitates group-level purchases. If your warehouses or factories share a centralized system, your data will be accessible from a single reporting entity. This makes it easier for your staff to gain visibility of stocking requirements from other branches, directly from a central purchasing department.

There is a wealth of opportunity to reduce purchasing costs. With data-driven decisions, accurate demand planning, opportunities for discounts, and group-level purchasing, your ERP is the ideal tool to use to achieve this.

To learn more about how ERP enables you to reduce purchasing costs, give us a call on 011 792 9521. We’d be glad to offer an obligation-free needs analysis and guide in selecting the ideal solution for your unique business requirements.