What is an integrated purchasing program?
An integrated purchasing program is a system businesses leverage to track and manage all of their spending over a period of time in one centralized location. By centralizing and housing all purchasing information together, businesses benefit from ease of access to data and increased financial visibility. Combining these two benefits allows companies to know their spending patterns and thus help reduce the risk of overspending and maintaining profitability for projects.
For residential construction companies, an integrated purchasing program includes multiple functions including bid management, change orders, purchase orders, and integrating with an accounting system.
Benefits of an using integrated purchasing program in residential construction
By integrating all purchasing operations together in one place, residential construction companies experience a number of benefits throughout their business.
Increased access to information
While most construction companies use accounting software to handle financial transactions, only a small percentage of team members will have access to the information or the knowledge of how to run reports or find the information they are looking for. Integrated purchasing programs, on the other hand, allow company employees to have direct access to financial information in a straightforward and organized manner. This increased visibility lets team members, whether they are project managers, selections coordinators, or estimators, have a clear picture of the financial impact of decisions on the overall project in real-time. Everyone can stay on the same page with the latest information in a cloud solution that is easy to access from any team member anywhere.
Integrated purchasing programs increase financial transparency by showcasing all costs together in one easily accessible system. For residential construction companies this means seeing accrued costs broken out by line items. CoConstruct’s construction management software handles this by letting builders and remodelers see their expected costs, derived from the initial estimate, and actual costs side by side for line items. This transparency throughout the life of residential construction projects means costs can be tracked at any point in time to ensure that as decisions are made overall project profitability remains intact. This also allows teams to analyze and understand where costs differ from estimated costs to better set up future expected costs and margins in upcoming projects.
End-to-end purchasing system
Integrated purchasing programs allow businesses to run all of their purchasing operations through a single system. For residential construction companies this means managing bids, sending purchase orders, handling selections, issuing change orders, and integrating with an accounting system. This end-to-end management allows businesses to eliminate double entry in their purchasing systems and instead track costs as they move or change during a project. This saves time for teams and means less costly mistakes.
Speaking of time saved, integrated purchasing systems not only save businesses time by bringing purchasing systems together but also by automating tasks. For instance in Coconstruct’s software platform, after a builder or remodeler sets up their initial estimate all of that information flows into other parts of the software including specs and selections, bid management, purchase orders, the budget, and more. Once money needs to change hands the applicable information is pulled or pushed from or to a company’s accounting system to automatically keep both systems in sync. Streamlining purchasing data allows businesses to input information once and then use it throughout the life of a project, saving time and resources in the process.
Where to find integrated purchasing programs
There are a variety of purchasing management platforms available in the market today such as Procurify and Spendwise that offer a number of features for different industries. However these systems are limited to just handling purchasing information so it would be beneficial for any business interested in the above benefits to research if their company only needs a purchasing system or if they could benefit from a full-service project management system that incorporates integrated purchasing programs in their features.
For example CoConstruct’s construction management platform has a full suite of financial features that cover the basis for integrated purchasing management while also offering project management features to help home building and remodeling professionals grow their business. Learn more about all the features CoConstruct offers online here.