“If you don’t have standardized processes how are you going to provide a consistent way to automate them?” – SupplyChainToday.com
Pilfering, inadequate documentation, an unstructured process and more – all together can safely define the purchasing process in both big and small sized companies. The process is further complicated since most companies do not have or use the right tools, leaving room for errors, which lead to massive waste of the time and resources of the procurement team and process. It would make sense then to leverage digitization and use digital tools rather than manual processes to obtain goods in a faster, more efficient and accurate manner. This exposition will look at the efficacy of flowcharts in the purchasing process. The visualization of this process through flowchart diagrams will ensure and definite procuring and approval chain of command, enhance communication, reduce errors and ambiguity, and cut back on any time being wasted.
An understanding of what constitutes an effective purchasing process is important before ascertaining the efficacy of flowcharts in this process. Simply put, this is a process that the purchasing team uses to procure items required. For this process to be effective, it must follow certain steps: a defined and approved list of good and services to be bought, list of in-house personnel responsible for gaining approval, making the purchases, and ensuring payment to vendors. In addition, the purchasing process must identify any eventualities that could pose problems in the process, and the team responsible must ensure proper reporting and handling of any documentation involved so as to ensure smooth accounting and auditing in the future. While the process may seem simple, it really can prove quite unwieldy especially if companies continue to use shabbily printed out forms that are filled out in a hurry and remain incomplete. It would therefore, make sense to use high performance tools to make the building of a top class procurement practice within your organization.
The efficacy of flowcharts cannot be underestimated, given their versatility and flexibility to suit the specific context and procurement operation within any given company. Any procurement process would have the 3 Ps:
- The process dealing with the rules and methodology to be used while ordering, receiving, and paying for the services and goods. The flowchart diagram depicting the process of a small item would be simpler as compared to the one describing the process of buying a high value item or a bigger purchase. However, in either case the visualization of the process through a flowchart would make the process easy to understand and follow.
- The names and titles of personnel responsible for initiating a purchase and those who can authorize payment must be clearly mentioned too.
- Accurate paperwork to support reporting and documentation of the purchase must be in place, and kept together for each transaction, and must be easily retrieved for reference and auditing purposes.
The efficacy of flowcharts in visually depicting the 3Ps can only be known when a company uses this tool / diagram to capture its own unique procurement process. The flowchart that is used to capture the purchasing process would include a flowchart depicting the purchasing cycle as also the process of receiving those goods. These flowcharts will ensure that anyone viewing them will be able to understand the manner in which the purchasing process flows within their company. This proves extremely beneficial for new employees and for cross-functional job rotations, in addition to ensuring the transparency and integrity of the entire process and of those involved.
Another aspect of the purchasing process is the selection of vendors and their ability to supply goods and services in a timely manner. Using flowcharts, the purchasing process personnel can clear document with names of vendors the responsibility and timelines agreed to for a particular category of services or goods ordered. The flowchart would also depict the quality and measurements of the goods expected, price agreed, and date and time of delivery. As per purchasing process rules, each new order must have a minimum of 3 quotations from various suppliers in order to ensure that the company gets the lowest quote and best service. In addition, from making an assessment of past flowcharts, a company would be able to decide which suppliers should be preferred in order to benefit from sustainable vendor relationships.
A flowchart to represent the separation and assignment of responsibilities, and including the process for approval, must also be part of the purchasing process. An unambiguous and clearly laid out process flow for this portion would reduce the risk of fraud such as inappropriate purchases, favoritism towards particular vendors for possible gains, and to ensure that a proper quotation procedure is followed when buying any goods or services. The efficacy of a flowchart comes to the fore also to help with reducing overlaps of responsibilities and any possible issues arising from blurred lines of accountability.
The purchasing process clearly defined through flowchart diagrams, can be easily cross-checked through the documentation available and with those persons named in the diagrams. This will allow retrospective checking and identification of errors and deliberate breaches of process and policies. Flowcharts therefore prove effective in maintaining an audit trail and forming part of structured documentation. In addition, flowcharts help with properly depicting accounting of finances during the purchasing process. A company can make a quick assessment of their tax liabilities and profitability through proper documentation, of which flowcharts would be an inextricable part.
We further illustrate the efficacy of flowcharts in the purchasing process.
One of the biggest advantages of a flowchart within the purchasing process is the ability of this tool to depict several processes with a sequence, compressed in one document in an understandable format. All those personnel who would be responsible for any part of procurement would easily understand the workflow, and over time the company would be able to remove any redundant steps in a bit to improve and make the pace of the process more agile.
Flowcharts aid ease of communication, and in some instances can be an effective alternative to time wasting meetings. Through the clear depiction of each sequential step, members of the team would know exactly what is expected of them. This in turn would also increase accountability and encourage cohesiveness and coordination between those responsible for the process. When each person would know what they need to do, and the division of work equitable, each member would be able to work a lot better and consistently, which in turn would enhance confidence of those involved and efficiency of the overall process.
Every business is prone to inefficiencies, which can be extremely costly in terms of money, reputation and time. An inefficient purchasing process can result in delays in purchasing, transaction disputes, and angry customers. For such an important process, using outdated tools and reporting methods, can prove extremely detrimental to the financial health of the company. Taking advantage of and leveraging the efficacy of flowcharts can be the technological solution that your company needs to transform its purchasing process from an agonizing one to one that is comparable a world class process. If it is time for your company to undergo a major technological transformation, dump your traditional and obsolete tools in favor contemporary tools such as flowcharts.
