Long Business Systems, Inc. (Lbsi)

Long Business Systems, Inc.
(LBSi)
Slide 1
Copyright 2011 * Keith Taylor presentation for: SAP Business One Summit Lake Lanier, GA * 10/26/2011 10/28/2011
Who am I: Keith Taylor

My background:
Slide 2
22 years of hands on purchasing and materials management

experience with a Cleveland, OH area manufacturer and distributor of
municipal and industrial truck mounted sewer cleaning equipment,
parts, and supplies.
16 plus years experience implementing business systems and helping

companies improve their efficiencies and bottom line through
Business Process Improvements.
Certified SAP Consultant all versions since 2004
SAP Partner since 2004.

Ten Ways to Improve Your Purchasing Department

Agenda
1.
Establish, monitor and follow Department Goals
2.
CRM and now VRM
3.
Requisitions / Purchase Request for Quotes
4.
Purchase Orders
5.
Purchase Order Acknowledgements
Slide 3
Ten Ways to Improve Your Purchasing Department

Agenda
6.
Expediting of Past Due Purchase Orders
7.
Vendor Managed Inventory (VMI)
8.
Vendor Performance Reviews
9.
Vendor Purchase History Analysis
10. Networking
and Continued Education
Slide 4
Establish Department Goals
Some examples:
Slide 5
Cost Savings by buyer / product line or other measurement. Establish

measurable cost savings goals. Monitor and report on progress
monthly.
Vendor Reductions. The more vendors you maintain and use the
higher your costs.
Vendor on time delivery improvements.
Vendor quality improvements

Establish Department Goals (continued)
Measure and track the goals:

If
you are not utilizing a business software or your business software

does not provide tools to help you monitor and measure your goals
you probably will not meet your goals. Manual or antiquated methods
of tracking goals:
Excel or other spreadsheet tools
Word Processor
Slide 6
Many
Software packages include methods and tools to allow you to

easily monitor and track your department goals.
CRM and Now VRM

Are you utilizing VRM to run your purchasing and
materials management departments?
Slide 7
CRM (Customer Relationship Management) has been around for

several years. Many organizations utilize this to manage their prospect
and customer relationships but surprisingly we find that few
organizations incorporate methods to manage their relationships with
their vendors.
VRM (Vendor Relationship Management) can be used to effectively

keep track of vendor quality issues, expediting of purchase orders,
request for quotes and other every day purchasing functions.
VRM (Vendor Relationship Management)

Examples of manual methods:
Hand written notes on purchase orders pertaining to

expediting and other issues.
Keeping track of purchase order receipts by hand on the

purchase order.
Manual vendor correspondence concerning quality issues.
Slide 8
VRM (Vendor Relationship Management)

Methods to manage using a software solution:
Slide 9
Notes, documents, drawings, etc that can be attached

directly to purchase orders or vendor records so that they
are visible to all personnel.
Manual vendor correspondence concerning quality issues.
The benefits of including VRM in your business system are

huge as you have one source for all information that can
be viewed by all departments and users.
Examples of some of the above in SAP Business One

Requisitions
Does your company utilize requisitions in their
day to day operations?
Requisitions are used by many companies to control and limit

purchases.
Sometimes used in conjunction with dollar amount restrictions:

Maximum per requestor
Approval limits by approver
Be
Slide 10
consistent. What ever the polices and procedures say follow

them always.
Requisitions (continued)
When to use requisitions:
All materials, capital expenditures, expenses, and supplies
Only capital expenditures, expenses and supplies Manual

vendor correspondence concerning quality issues.
Again,
be consistent and follow the companys policies in all
cases
Slide 11
Manual Methods:
Hand written forms
Excel or Word Forms
Emails
Notes
Verbal
None we dont have any controls in place and do not need them
Slide 12
When incorporated within a Software solution:

Many software business systems include requisition capabilities

with functionality such as the following:
Users create their own requisitions
Ability to track and monitor open, in process, closed and

converted requisitions.
Slide 13

Functionality
Easily
(continued)
convert requisitions to purchase orders
Ability
to send requests for quotations to multiple

vendors

Slide 14
Examples of requisition capabilities utilizing SAP Business

One
Purchase Request for Quotations

Manual Methods:
Slide 15
Hand written forms
Excel or Word Forms
Emails
Notes
Verbal
None I placed the order with the vendor I last purchased

from
Purchase Request For Quotations

Slide 16
Many software business systems include purchase request for

quotation capabilities with functionality such as the following:
Users can create their own Request for Quotations
Ability to track, monitor, and convert Request for Quotations
to purchase orders
Ability to send Requests for Quotations to Multiple vendors
Example of Request for Quote generated by SAP Business
One
Purchase Orders
Purchase Orders are legal contracts with your vendors.
Should always be placed in writing. Verbal purchase

orders lead to errors or disputes as to what is being
purchased and the terms and conditions that apply.
Email
Fax
Slide 17
Snail
mail
Purchase Orders (continued)
Must
be complete including:
Complete
descriptive information for all items, supplies

and services requested including your companys part
numbers, vendor part numbers, etc.
Include
prices
Required
Slide 18
Terms
delivery dates
and conditions
Examples in SAP Business One
Purchase Order Acknowledgements
Require
your vendors to acknowledge receipt of your purchase orders
Slide 19
Track acknowledgements either manually or within your software

solution.
Manually this can be time consuming and is usually done by just

making notations on printed purchase orders
Utilizing a software solution to track acknowledgements
Examples of purchase order acknowledgement capabilities in SAP

Business One
Throughout
my purchasing and materials management career this was

one of the most inefficient tasks to be conducted by purchasing and
sourcing departments. Many companies still struggle with this area on
a daily basis.
Many companies employ several expeditors whose sole jobs are

to verbally phone suppliers to check on the status of shipments that
are late or due to arrive.
Slide 20

(continued)
The Hard Way:
Slide 21
Run the open purchase order report and highlight vendors to call.
Pull the old hard copy of the purchase order out of the file drawer and
call the vendor. While we have the hard copy on our desk lets make
notes on it and then re-file the purchase order back in the file drawer.
Great concept but only the expeditor knows the details of the call and
only if he or she pulls the purchase order back out of the old file drawer.
Do nothing and wait until the shop floor, warehouse, customer service
personnel, owner or your boss calls you to ask where the material is.

The Pro-active (easy) way:
Some
software business systems provide you with tools,

features and capabilities to easily perform this function without
adding personnel to the staff. In fact if properly setup, you can
actually reduce staff while maintaining better on time shipping
performance and customer satisfaction.
Think
Slide 22
of how much more business you can realize from your

customers if you improved your on time delivery performance
from industry averages of 80% to more than 95% and above.

The Pro-active (easy) way:
Sound
hard?
Actually
very easy by setting up alerts to notify buyers in

advance that purchase orders are either due to arrive or are
late.
Send
notices to vendors regarding their late shipments

requesting responses via email
Update
purchase orders with new delivery dates
Slide 23
Lets
look at a simple late purchase order alert in SAP

Business One
Once
an unheard of concept Vendor Managed Inventory concepts are a great

way of reducing your inventories and cost of doing business.
Negotiate
with your vendors to place their inventory in your facilities without

cost to you until you use it.
Benefits
for you (the customer) include:
Improved cash flow

Slide 24
Lower cost of doing business no need to constantly be checking with

your vendor and placing purchase orders for the same materials over and
over again
Benefits
for you (the customer) include (continued):
No stock outages
Benefits
to your vendor include:
a happy customer (You)

Less chance of you constantly shopping for a better price or a
different vendor.
Slide 25
Maybe you use those Purchase request for Quotations you

learned about less often.
Vendor Performance Reviews
Conduct
Areas
periodic performance reviews with your top vendors:
should include:
Ease of doing business

Quality and Customer Service
On time delivery
Slide 26
Cost
Ability to track:
How many times an item or service is purchased over a
period of time
Dates
Quantities
Slide 27
Costs
Detailed Purchase Information
Could you do a better job with vendor negotiations if

you had the ability to easily track and retrieve
information such as that listed above??
Slide 28
Vendor Purchase History Analysis (continued)
Many
companies maintain this information in spreadsheets,

manual cards, or files or not at all.
The
ability to easily track and retrieve this information from

your software solution can in many cases pay for the
software solution.
The
Slide 29
following are some examples of how information such

as this is easily stored and maintained in SAP Business
One.
Network and Continued Education
Network . Network .Network
Slide 30
Attend conferences like this SAP Business One User

Conference
Participate in local SAP Business One User Groups
Meet with your vendors and ask them for suggestions,
solutions and recommendations for other vendors.
Meet with your peers and other professionals
Network and Continued Education (continued)
Slide 31
Network . Network .Network

Constantly be changing yourself. The way we are doing
business today is very different then when I began my
purchasing career back in 1973
Join local and national purchasing organizations such
as:
APICS (The association for Operations Management)
American Purchasing Society
National Purchasing Association
Long Business Systems, Inc. (LBSi)

Helping businesses manage technology for success
Questions or need assistance in using or implementing
Business One?
Keith Taylor, Vice President
email: keith@lbsi.com
Phone: 440-846-8500 ext 26
www.lbsi.com
Connect with me on twitter: @keithtraylorLBSi
Slide 32

Long Business Systems, Inc. (Lbsi)

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Long Business Systems, Inc.

Who am I: Keith Taylor

22 years of hands on purchasing and materials management

16 plus years experience implementing business systems and helping

Certified SAP Consultant all versions since 2004

SAP Partner since 2004.

Ten Ways to Improve Your Purchasing Department

Establish, monitor and follow Department Goals

CRM and now VRM

Requisitions / Purchase Request for Quotes

Purchase Order Acknowledgements

Ten Ways to Improve Your Purchasing Department

Expediting of Past Due Purchase Orders

Vendor Managed Inventory (VMI)

Vendor Performance Reviews

Vendor Purchase History Analysis

and Continued Education

Establish Department Goals

Cost Savings by buyer / product line or other measurement. Establish

Vendor on time delivery improvements.

Vendor quality improvements

Establish Department Goals (continued)

Measure and track the goals:

you are not utilizing a business software or your business software

Software packages include methods and tools to allow you to

CRM and Now VRM

CRM (Customer Relationship Management) has been around for

VRM (Vendor Relationship Management) can be used to effectively

VRM (Vendor Relationship Management)

Hand written notes on purchase orders pertaining to

Keeping track of purchase order receipts by hand on the

Manual vendor correspondence concerning quality issues.

VRM (Vendor Relationship Management)

Notes, documents, drawings, etc that can be attached

Manual vendor correspondence concerning quality issues.

The benefits of including VRM in your business system are

Examples of some of the above in SAP Business One

Requisitions are used by many companies to control and limit

Sometimes used in conjunction with dollar amount restrictions:

Maximum per requestor

Approval limits by approver

consistent. What ever the polices and procedures say follow

All materials, capital expenditures, expenses, and supplies

Only capital expenditures, expenses and supplies Manual

be consistent and follow the companys policies in all

Hand written forms

Excel or Word Forms

When incorporated within a Software solution:

Many software business systems include requisition capabilities

Users create their own requisitions

Ability to track and monitor open, in process, closed and

When incorporated within a Software solution:

convert requisitions to purchase orders

to send requests for quotations to multiple

Examples of requisition capabilities utilizing SAP Business

Purchase Request for Quotations

Hand written forms

Excel or Word Forms

None I placed the order with the vendor I last purchased

Purchase Request For Quotations

When incorporated within a Software solution:

Many software business systems include purchase request for

Purchase Orders are legal contracts with your vendors.