In manufacturing, efficient procurement is an essential component of on-time production. A proper purchase plan would help guarantee that all materials are available when needed and avoid delays, excess materials, and added costs.
This blog will describe the entire process of developing a smart purchase plan from start to finish, which involves various steps such as Material Requirement Planning (MRP), creating Purchase Order Intent (PO Intent), creating Purchase Orders, and inward tracking of materials- all connected through ManufApp, a modern manufacturing ERP solution for manufacturers.
What is a Purchase Plan?
A purchase plan is a systematic process that coordinates purchasing buffers for current and future production requirements. The purchasing plan allows manufacturers to plan and make reasoned decisions while answering fundamental questions such as:
What materials are required?
When to obtain the materials?
How much to purchase?
Who are the preferred vendors?
What is the cost or estimated/budget used?
The purchasing plan helps manufacturers manage buying spaces, align purchases to avoid protecting supply chain conditions or restraints, keep productions on schedule, and avoid surplus materials or manufacturing downtime.
Why Smart Purchase Planning Matters
Smart purchasing planning can lead to several important benefits for your manufacturing organization, including:
On-time production: Getting materials into your plant before a production run starts.
Cost control: Preventing you from buying too much and reducing expensive, last-minute sourcing.
Inventory optimization: You have stocks available when there is demand, but not so much as to tie up the working capital.
Improved supplier management: Because you are planning ahead, things run smoother with your suppliers, you can communicate well with suppliers, and you can negotiate better prices.
Step-by-Step Guide to Building a Smart Purchase Plan
1. Run MRP to Understand Materials Needs
The whole process begins with MRP (materials requirements planning), which is 100% automated in Manufapp. The MRP engine considers the following:
- Production orders
- BOM (bill of materials)
- Stock availability
- Safety stocks
- Lead times
It pulls all this information to produce a list of materials required, including timing and quantities.
Example: If you’re planning to produce 1,000 of a product that takes two bolts per unit, and you have 500 in stock, then the MRP would give you a requirement for 1,500 bolts.
In certain situations, companies also include sales forecasts while running MRP. This is especially applicable when the delivery lead times of different Raw Materials are very high and manufacturers will not be able to fulfill their commitments if material is procured only when the order is confirmed.
2. Establish a PO Intent (Purchase Order Intent)
The next step after the MRP run has been completed and evaluated is to establish a PO Intent. A PO Intent is an internal document or draft that identifies:
Where materials are needed and specifications
- Estimates quantities
- Preferred suppliers
- Estimated delivery dates
- Budgeted or target costs
A PO Intent allows internal departments a chance to review and approve purchase orders ahead of sending the actual order. Manufapp’s workflow is designed to easily manage this while ensuring all department relevance is fully visible.
3. Create and Send a PO
Once the PO Intent is approved and confirmed, then it can be issued as an official Purchase Order [PO] to the supplier. The PO will include the following:
- Final item and quantities
- Final price
- Agreed upon expected delivery dates or time frames
- Payment terms
- Shipping details
ManufApp automates this entire process so it can be verified, there is no manual or labor, and orders can flow through the system much faster.
4. Track Materials Inward
When the materials arrive, the inward process begins. ManufApp wants to help manage this back into the warehouse by:
- Verifying the delivered amounts & condition
- Recording into the ERP
- Creating a goods receipt note (GRN)
- If applicable, conducting quality assessments
- Adjust the inventory count live
By managing materials inward efficiently, the record of the inventory is live and accurate; this way there will be no delays in materials for production.
How ManufApp Helps Manufacturers Plan Smart Purchases
Manufapp helps manufacturers to create and execute smart purchase plans from end to end. Here’s how:
Automated MRP: Leverages real-time data, including data on production and inventory, to determine what to purchase.
PO Intent Workflow: Let internal stakeholders work together to approve a PO before you finalize it.
PO Automation: Eliminates repetitive, manual work, and enables you to have a reliable and timely process to generate orders.
Real-time Inventory Sync: Allows you to maintain accurate stock levels when materials are received and tracked.
Inward Tracking: Helps you to make sure you have proper traceability, stock levels, and materials that are ready for production.
Common Pitfalls to Avoid
Avoid making these common mistakes when trying to create a viable purchase plan:
- Using stale lead times or false stock levels.
- Skipping the PO Intent step by sending POs that are incomplete or incorrect.
- Ordering materials by managing procurement via a disjointed toolset, or spreadsheets.
- Delaying the inward receipt of materials, which has a cascade of issues on inventory levels and accuracy.
ManufApp allows you to develop an integrated, automated, and streamlined process and eliminate these pain points.
Conclusion: Turn Purchasing Planning into a Competitive Advantage
Smart purchasing planning is about more than simply making material purchases; it is about linking the procurement process to the company’s production goals, minimizing inventory, and having a more agile supply chain. ManufApp’s features, such as MRP, PO Intent, and real-time material tracking, give manufacturers total control of the procurement process.
Are You Ready to Streamline Your Procurement?
Find out how ManufApp can make your procurement process—from forecasting to delivery—more streamlined and robust.
Contact us today for a tailored demonstration and find out how your team could save money, be more efficient, and never miss a production deadline from a lack of materials.
