How Purchasing Automation Benefits Essential Roles – Purchasing Manager, Materials Manager, Shipping & Receiving
Published on: 16 July 2019

In this blog series we show how Rillion AP Automation makes a difference, role by role, to the people in an automotive manufacturing firm. It highlights how the technology can impact all of the people purchasing and invoice processing touches, empowering roles in the organization with transparency and accountability. In this article we show how essential roles benefit from purchasing automation.
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You are responsible for negotiating the best possible price for the direct material that the company uses at all its locations. They cut a blanket PO and move on. The blanket PO has no final dollar amount or quantity, but rather a “piece price”. In cases where there is tiered pricing, those tiers are listed as text in the body of the PO. You don’t order the material, but sets the stage for the ordering to begin.
Your vendors provide indirect material with discounted pricing based on payment terms. Purchasing has no way to know if the vendor is invoicing the agreed upon price unless AP flags the invoice.
The purchasing department isn’t involved with 90% of indirect material purchasing – and yet they are responsible for creating and ensuring that the organization follows the appropriate procedures for purchasing.
As a member of the purchasing department, you are responsible for handling all service contracts.
You’re part of the approval chain for any scenario where purchasing takes place – something that may have not happened before.
Rillion lets Purchasing perform audits on vendor performance about whether they are invoicing for the negotiated price, or if the vendor is shipping the quantities requested. Rillion assists with energy use audits in order to claim energy rebates – without relying on another department to provide the historical information.
The Materials Manager plays a key role in the manufacturing process by ensuring that jobs are run on schedule. All the necessary materials and components for each scheduled job have to have sufficient inventory levels.
The role works hand in hand with Purchasing because the purchasing department negotiates with vendors to get the best pricing. That includes tiered pricing based on volumes.
You know where the best price breaks are and you order material accordingly. You take into consideration the cost to keep the material on hand in inventory as well as the frequency of manufacturing the parts that consume that material.
Your final part of any transaction should be to place the order according to all of these pieces of information. If the vendor ships quantities other than what you ordered, the company could pay a higher price because the information from the order is not available to anyone in Accounts Payable.
To AP, the invoice could look perfectly ‘normal’ because they do not know that you ordered 1,000 pieces to get the price break – yet the vendor shipped 2 shipments of 500 and billed them at a higher piece price.
There is only one department between you and the accounting department, and that is shipping/receiving.
Your role is to record direct material as it is brought in to the plant. You are the only role that stands between the materials department and an invoice being paid correctly.
When you are entering the receipt, you must enter it against the correct release. This is the only way for AP to know what the amount of the invoice should be and ensures that the vendor is invoicing according to the price breaks in their contract.
Manufacturing companies face numerous challenges when it comes to invoice processing and accounts payable automation.
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