Simplifying Purchasing and Procurement in Microsoft Dynamics NAV or Business Central

Simplifying Purchasing and Procurement in Microsoft Dynamics NAV or Business Central

On the surface, purchasing and procurement seem fairly simple: you find the vendor with the best price, terms, and delivery schedule, place an order, and receive it. However, there is the planning side to purchasing, and that’s where it gets complicated. In this blog post, we discuss ways you can simplify the process around purchasing and procurement using your Microsoft Dynamics NAV or Business Central ERP system.

What is Purchase or Procurement Planning and Why Is It Important?

It’s a simple definition: the process of determining what to buy, when and from what source. During the process, the procurement method is assigned and the expectations for fulfillment of procurement requirements is determined.

In addition to helping decide what to buy, when and from what sources, procurement planning is important for these reasons:

  • It enables planners to determine if expectations are realistic and within the boundaries of the planning process.
  • It forces stakeholders to meet and discuss requirements and provide relevant input.
  • It facilitates the creation of a procurement strategy, including market surveys and which method to use depending on circumstances and requirement. 
  • It enables planners to estimate the time required to complete the procurement process and award contract for each requirement—which also confirms the validity of the period expected. 
  • It allows for the right resources to develop technical specifications and assess scope of work for certain requirements, especially where these resources are not available in house.
  • It enables planners to assess the feasibility of combining or dividing procurement requirements into different contract packages.

How is Purchase/Procurement Planning Done…and Why Does It Fall Short?

Typically, purchase or procurement planning is done offline, in Excel or similar tool. While purchase requisition worksheets are good tools, they force the processing of a great deal of data and then filtering it based on what information is needed today…and again tomorrow…and so on.

If your company requires looking months into the future because of long lead times—which are more common than not these days—this process can be time-consuming and intimidating, as most people don’t have the intimate knowledge of the data being calculated.

How to Simplify Purchasing and Procurement: Let Your ERP Do the Heavy Lifting

The first and most obvious way to simplify your processes—while making them more dependable—is to work within your Dynamics NAV or Business Central ERP rather than Excel. Excel, which is like doing MRP offline, is time-consuming and full of risk for inaccuracy because of how the data is handled. Excel is a good tool, but you still have to manually enter POs into Dynamics, so why not automate the process there, especially since it’s integrated with other systems? All you need to do is a few things, like setting up purchasing codes.

By doing so, you can use real-time data for your calculations, set up lead times within the system as opposed to calculating them in your head. It’s simply calculated as part of the planning worksheet. What else can you store in Dynamics? How about the pricing information on that grungy laminated sheet you keep in your desk or tacked to the wall? With that information in Dynamics, you can easily determine who to use and get that PO moving along. 

Other Areas Ripe for Simplifying with Your ERP

Where else can you use your Dynamics ERP? Here are a few suggestions:

Blanket orders. These work well as a blanket contract or work order. They help you use pricing benefits with a vendor by pulling in that special price from the planning worksheet, and they help you keep track of how many orders you have made against your commitment. It’s also easy to create a release from a blanket. However, blanket orders do not work with your planning worksheet, so you might need a modification to your system. 

Purchase orders in the subcontracting process. POs play a vital role in the subcontracting process, primarily for manufacturing. Ties between the purchase order and the services you are buying become a step in the production process, and receipt of the PO actually updates the production order.

Buying non-inventory items. When you need to buy non-inventory items, such as office supplies, you don’t have to apply them directly to a G/L account because using G/L lines on a PO line is not included in inventory valuation. With Dynamics NAV or Business Central, you can capture that data as an expense. 

Buying resources. As with non-inventory items, resources like freight can be tracked without exposing them to the G/L.

Use Your New-Found Time to Focus on Vendors

By automating and shifting those processes to your ERP, your procurement team can focus on vendor selection, looking at delivery time performance, delivery quantity performance, and quality of goods.

You can use your ERP for this process as well by storing vendor data in your ERP and keeping an Approved Vendor List there as well. From this list, you can assign default vendors, but if the default vendor is not available, it’s easy to find another approved vendor to work with—right in your ERP. 

Whip Your Purchasing and Procurement Into Shape with Dynamics NAV or Business Central

Get rid of those manual processes and focus on your vendors! Talk to the experts at ArcherPoint about how you can use NAV or Business Central to automate your procurement and purchasing for a smoother, more reliable supply chain.

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