Complete Purchasing Process For Small Business

Bill Kohnen Global CPO Panel

Complete Purchasing Solution for Small Business

Start ups and established SME’s can put in place an Purchasing system with nearly all the

functionality of a specialized purchasing tool or a major ERP system at virtually no cost.


Executive Summary• Having a Purchasing Process in place will:

– Save Money– Improve Control– Help meet audit requirements– Increase value you get from Suppliers

• A functional Purchasing process can be put in place for nearly no additional cost that has all the elements of systems used by Fortune 100 that cost millions

• At some point the suggested process does reach its limit however everything done is transferable to a best in class SaaS reasonably price more scalable tool.


SME’s Have The Capability to Put in Place a Purchase Process Equal to Any Enterprise Solution

• Purchase Request• Approval Routing• Signature Authority Matrix• Indirect Material Sourcing• Paperless Electronic RFx• Spend Analytics• Customized reporting and dashboards• Supplier Management /Rating• Audit Ready• Record Retention• Compatibility with any ERP system• Require no additional hardware or software • Can put in place in weeks • No limit on number of users and can be used globally• Complete Flexibility to make changes• No ongoing maintenance• Cost to put in place can be all internal or ~ $8,000 Max with outside consultant


Purchase Request

• Create format suited to your needs on excel • Auto calculate easy to set up• Frequent users can save with prepopulated

info• Variety of options for numbering if needed


Sourcing

• Purchasing Group publishes Approved Sources Listing

• Can be a word or excel document that simply lists:– Category, – Link to Supplier Website Set up for company


Signature Authority Matrix

• Simply Create as a Excel Worksheet• Maintained by Controller• Posted on public shared drive, sharepoint site

or internal website


Approval Routing

• Easily done with Outlook utilizing voting buttons

• Requestors puts requests on body of PO• Requestor adds approvers per signature

authority matrix• When approvals obtained requestor forwards

to company main contact for purchase request approvals


E Rfx

• Templates created as Word and/or Excel• Evaluation templates as Word an/or Excel• Team review sites set up on shrepoint or

shared folder


Spend Analytic

• Best place to draw data is from Accounts Payable• Get in excel format• Payee, Date, description of service, requestor, business

group, pay terms• Unlikely that data out of AP has all information needed

and will need manual intervention• Get data 90% correct• Use pivot table for review• 2 to 3 times per year is ok for frequency under normal

conditions


Custom Dashboards

• No limit to views based on what is important to you

• Can view and create from raw spend data• Can publish “standard” reports as KPIs• Presentation in Word, Excel or Powerpoint

Format


Supplier Management and Rating

• Excel Format• Category Manager can route view email to

approvers or simply have quarterly ratings done on sharepoint or shared drive

• Transfer rating template to send to supplier via e-mail

• Save ratings and supplier message to shared folder for audit


Audit Ready

• Finance and Accounting Audit– Signature Matrix Readily available– Process follows accepted business practice– Easy access to approvals/documentation for detailed

audit• ISO/TS/Customer Audit– Supplier Management and Rating records stored in

one electronic location– Easy access from any site globally – Typically would add other documentation


Record Retention

• Simply keep on shared drive• Storage requirements not significant• Total flexibility to define how to store– By time– Dept– Request– Amount

• Even bulk storage is easily searchible


Compatible with any Finance ERP

• However you manage overall financials whether manually, cloud based SaaS like NetSuite or enterprise wide SAP/Oracle data easily input into system.

• Can be clerk level manual process• Possible to write macro to pull information

directly from request but requires more standardization and discipline in process


Requires No Additional Hardware or Software

• Assumptions

– You have MS Office with server.– Internet– Sharepoint is optional


Easy to Put in Place

• Create forms and templates• Deploy• Train main users


No limit on number of users globally

• Only constraint is the Microsoft licensing agreement you have but generally all employees who would create requests would need access to Microsoft anyway

• Can easily customize format and templates for local languages and process as needed


Complete Flexibility

• You control format of templates• You control routing• You control process• All can be changed with no cost


No Additional Ongoing Maintenance

• For the actual application no extra maintenance.

• Just what you may or may not already have in place


Cost to Put in Place• Could be done all internally with someone that have understanding of

Purchasing/ Finance process with average Microsoft knowledge.

• Outside consultant can bring process knowledge and coach on best practices for setting things up which generally makes things move faster.

• Typical time and cost depends on company size and how much they initially want to put in place. A basic purchase request process including approval with audit ready storage should take a week and be ~ $10K

• Incorporating Rfx and Supplier Rating add cost usually related to more time spent on methodology/process and template design.


Go for it

• Can put in place now• Do it yourself or low cost outside help• Nothing you do will lock you in to this as a ling

term solution• When and if time comes to move to a SaaS or

Enterprise tool no restraints and legacy data could easily be moved to new system