How Connected Procurement Creates Control

Learn how SIX PurchaseFlow connects purchase requirements, supplier sourcing, approvals, purchase orders, delivery monitoring, goods receipt, invoice control and supplier performance in one organised procurement process.

Purchasing is much more than ordering products from a supplier. Every purchase affects cash flow, inventory, production capacity, customer delivery dates and company profitability. A late material can stop an entire production line. An unauthorized order can increase costs. An incorrect receipt can create false inventory, while an invoice that does not match the purchase order can lead to overpayment.

SIX PurchaseFlow brings the complete purchasing process together:

Demand → Purchase Request → Approval → Supplier Sourcing → Quotation Comparison → Purchase Order → Delivery Monitoring → Goods Receipt → Invoice Control → Supplier Evaluation

This creates one connected flow between Purchasing, Warehouse, Manufacturing, Sales, Service, Projects and Finance.

Purchasing and procurement are not exactly the same

The terms purchasing and procurement are often used as if they mean the same thing. They are related, but procurement has a wider meaning.

Purchasing focuses on the transaction. It covers activities such as creating a purchase order, receiving goods and processing the supplier invoice.

Procurement covers the complete decision process. It begins when the company identifies a need and continues through supplier research, quotation comparison, negotiation, ordering, delivery, invoice control and supplier evaluation.

SIX PurchaseFlow connects both areas. It helps the business control the commercial decision and the operational transaction that follows it.

Why disconnected purchasing creates problems

In many companies, purchasing begins with an email, phone call or spreadsheet.

A production manager asks for material. A warehouse employee reports a shortage. A project manager orders a service directly. Finance receives an invoice but cannot identify who approved it. Meanwhile, Purchasing may not know that another department already requested the same item.

This creates several risks:

• Duplicate purchases
• Unauthorized spending
• Incorrect quantities
• Uncontrolled supplier selection
• Missed delivery dates
• Emergency orders
• Excess inventory
• Production delays
• Invoices without purchase orders
• Difficult supplier evaluation
• No clear audit trail

The main problem is not simply missing information. It is that different teams work with different versions of the same requirement.

SIX PurchaseFlow gives every purchase a controlled origin, responsible user, approval status, supplier decision, order history and delivery result.

The complete PurchaseFlow process

A structured procurement process follows a clear sequence:

1. A business need is identified.
2. A purchase requirement is created.
3. Existing stock and open supply are checked.
4. The requirement is reviewed and approved.
5. Suitable suppliers are identified.
6. Quotations are requested and compared.
7. A supplier is selected.
8. A purchase order is created and approved.
9. The supplier confirms the order and delivery date.
10. The order is monitored until delivery.
11. Goods or services are received and inspected.
12. The supplier invoice is checked.
13. Exceptions are resolved.
14. The purchase is financially processed.
15. Supplier performance is evaluated.

Not every purchase requires every step. A routine replenishment order from an approved supplier may follow a shorter workflow. A high-value machine or new raw material may require several offers, technical evaluation and multiple approval levels.

SIX PurchaseFlow allows the process to remain structured while reflecting the importance and risk of the purchase.

Stage 1: Identifying the purchasing need

Every purchase should begin with a clear business reason.

The demand may come from:

• A warehouse stock shortage
• A minimum-stock replenishment rule
• A manufacturing order
• A Bill of Materials
• A sales order
• A field-service appointment
• A project requirement
• An internal department
• Equipment maintenance
• A replacement investment
• A customer-specific request

The source matters because it explains why the purchase is required.

If Manufacturing needs 5,000 components for a production order, the requested quantity should be connected with that manufacturing demand. If a technician needs a replacement part for a scheduled repair, the requirement should remain connected with the service job.

Without this connection, Purchasing knows what to buy but not how important it is.

Types of purchasing demand

Purchasing requirements can be divided into several categories.

Direct materials

Direct materials become part of the finished product.

Examples include:

• Wood used in furniture
• Steel used in machinery
• Fabric used in upholstery
• Milk used in dairy production
• Electronic components used in equipment

Direct-material shortages can stop production.

Indirect materials

Indirect materials support operations but do not normally become part of the finished product.

Examples include:

• Cleaning products
• Office supplies
• Protective equipment
• Machine lubricants
• Packaging tools

Services

Companies also purchase work rather than physical goods.

Examples include:

• Transportation
• Machine maintenance
• Legal services
• Marketing
• Software subscriptions
• External manufacturing operations

Service purchasing requires clear scope, dates, rates and acceptance criteria because there may be no physical goods receipt.

Capital expenditure

Capital expenditure, often shortened to CAPEX, covers long-term assets such as machines, vehicles, buildings and major equipment.

These purchases normally require stronger approval because they involve larger commitments and may affect depreciation, maintenance and long-term capacity.

Subcontracted operations

Manufacturers may send an operation to an external supplier.

Examples include:

• Powder coating
• Heat treatment
• Special printing
• Laboratory testing
• Surface finishing

The subcontracted operation remains part of the manufacturing flow, even though an external company performs it.

Stage 2: Creating a purchase requirement

A purchase requirement or purchase requisition is an internal request asking the company to purchase something.

It is not yet a supplier order.

A structured requisition should answer:

• What is required?
• How much is required?
• When is it needed?
• Why is it needed?
• Where should it be delivered?
• Which department, project or order requires it?
• Is a preferred supplier known?
• What is the estimated cost?
• Who requested it?
• Who must approve it?

SIX PurchaseFlow turns informal demand into a structured record. This gives Purchasing enough information to review the request before making an external commitment.

Purchase requisition versus purchase order

These two documents have different purposes.

A requisition says: “We need this.”

A purchase order says: “We have approved the purchase and are ordering it from you.”

This separation prevents employees from placing supplier orders before the requirement has been checked and approved.

Stage 3: Checking existing supply before purchasing

Before creating a new supplier commitment, the business should check whether it already has enough supply.

This includes:

• Usable stock on hand
• Stock in another warehouse
• Reserved quantities
• Quarantined or blocked stock
• Existing purchase orders
• Expected warehouse receipts
• Open manufacturing orders
• In-transit transfers
• Future demand
• Safety-stock requirements

Suppose the warehouse contains 1,000 units, but 800 are reserved for production and 150 for customer orders. The physical quantity is 1,000, but only 50 units remain generally available.

Purchasing should therefore work with available supply, not physical stock alone.

A simplified calculation is:

Net purchase requirement = demand + safety stock − available stock − confirmed incoming supply

SIX PurchaseFlow connects with SIX StockFlow so buyers can understand the current inventory position before placing another order.

This reduces both shortages and unnecessary overstock.

Stage 4: Consolidating requirements

Several departments may request the same item.

For example:

• Manufacturing requires 2,000 units.
• Service requires 100 units.
• The warehouse needs 500 units for safety stock.
• Sales has confirmed demand for another 400 units.

Instead of creating four unrelated supplier orders, Purchasing can review the requirements together.

The total demand is:

2,000 + 100 + 500 + 400 = 3,000 units

Consolidating requirements can improve:

• Order efficiency
• Freight cost
• Supplier negotiation
• Delivery coordination
• Quantity discounts
• Visibility of total company demand

However, consolidation is not always the correct decision. One department may need the material immediately, while another needs it next month. Combining everything into one late delivery could interrupt urgent work.

SIX PurchaseFlow keeps the source, required date and purpose of each requirement visible during purchasing decisions.

Stage 5: Approval and spending control

A company should decide who can request, approve and order different types of purchases.

Approval may depend on:

• Purchase value
• Department
• Item category
• Supplier
• Project
• Currency
• Risk level
• Capital expenditure
• New supplier status
• Contract status

A small office-supply order may require one approval. A new production machine may require approval from department management, Finance and executive leadership.

Segregation of duties

Segregation of duties means that one person should not control every stage of a sensitive transaction.

A controlled workflow may separate these responsibilities:

• One employee creates the request.
• Another employee approves it.
• Purchasing selects the supplier.
• The warehouse confirms receipt.
• Finance verifies the invoice.
• An authorized person releases payment.

This reduces the risk of error, fraud and uncontrolled purchasing.

SIX PurchaseFlow preserves the identity, status and history of each purchasing decision. The business can see who requested, approved, ordered and received the purchase.

Maverick spending

Maverick spending means purchasing outside the approved process.

Examples include:

• Ordering directly without approval
• Using an unapproved supplier
• Ignoring negotiated prices
• Purchasing without a purchase order
• Splitting one large order into smaller orders to avoid approval limits

A structured PurchaseFlow process reduces maverick spending by giving employees a clear way to submit requirements while keeping supplier commitments under control.

Stage 6: Supplier management

A supplier record should contain more than a company name and telephone number.

Useful supplier information includes:

• Legal company name
• Registration and tax information
• Addresses
• Contact persons
• Payment details
• Payment terms
• Delivery terms
• Supported currencies
• Offered products or services
• Agreed prices
• Lead times
• Minimum order quantities
• Quality certificates
• Contract documents
• Banking information
• Approval status
• Performance history

SIX PurchaseFlow centralizes supplier information so purchasing decisions are based on current records rather than personal email history.

Approved and potential suppliers

A potential supplier is being considered but may not yet be authorized for normal purchasing.

An approved supplier has completed the company’s required checks.

Approval may involve:

• Legal verification
• Tax verification
• Financial review
• Product samples
• Quality audit
• Certification review
• Information-security review
• Insurance verification
• Sustainability requirements
• Trial delivery

The exact checks depend on the purchase category and industry.

A supplier providing office chairs does not require the same qualification process as a supplier providing pharmaceutical ingredients or safety-critical machine parts.

Stage 7: Supplier sourcing

Sourcing is the process of finding and evaluating possible suppliers.

Common sourcing documents include:

Request for Information

A Request for Information, or RFI, gathers general information about supplier capabilities.

It helps answer:

• Can the supplier produce the required item?
• Which countries can it deliver to?
• What certifications does it hold?
• What production capacity does it have?

Request for Quotation

A Request for Quotation, or RFQ, asks suppliers to provide prices and commercial terms for a clearly defined requirement.

It is suitable when the company already knows exactly what it needs.

Request for Proposal

A Request for Proposal, or RFP, asks suppliers to propose a wider solution.

It is more suitable for complex services, software, equipment or projects where the supplier must explain how the requirement will be fulfilled.

In normal product purchasing, the RFQ is often the most important document.

SIX PurchaseFlow can organize supplier quotations and connect them with the original purchasing requirement.

Stage 8: Comparing supplier quotations

The cheapest unit price is not always the cheapest purchase.

A complete quotation comparison should consider:

• Unit price
• Quantity
• Currency
• Discount
• Minimum order quantity
• Freight
• Insurance
• Customs duties
• Import taxes
• Packaging
• Payment terms
• Delivery date
• Lead time
• Warranty
• Quality conditions
• Return conditions
• Supplier reliability

Total cost of ownership

Total Cost of Ownership, or TCO, considers the full cost of buying and using something.

A simplified calculation is:

Total purchase cost = item value + freight + insurance + duties + handling + other directly related charges

A supplier may offer a lower item price but require expensive transportation, advance payment or a very large minimum quantity.

Another supplier may charge more per unit but provide:

• Shorter lead time
• Better quality
• Local support
• Smaller order quantities
• Better payment terms
• Lower transport cost
• Faster replacement of defective goods

SIX PurchaseFlow helps buyers compare complete commercial offers rather than focusing only on the first price shown.

Example quotation comparison

Supplier A has the lowest unit price, but it may not provide the best overall result. The correct choice depends on required quantity, urgency, cash flow, freight and supply risk.

Stage 9: Supplier selection

Supplier selection should combine commercial, operational and technical evaluation.

Purchasing may evaluate price and payment terms. Manufacturing may confirm technical suitability. Quality Management may review certificates. Finance may assess payment risk. Warehouse may check packaging or delivery requirements.

A simple weighted evaluation can be used:

The weights should reflect the real risk of the purchase.

For a standard office product, price may carry more weight. For a safety-critical manufacturing component, quality and technical compliance may be more important.

SIX PurchaseFlow keeps the selected supplier, quotation and purchasing requirement connected. This creates a traceable sourcing decision.

Stage 10: Creating the purchase order

The purchase order, or PO, is the formal document used to order goods or services from the supplier.

A complete purchase order may contain:

• Purchase-order number
• Supplier
• Order date
• Buyer
• Item or service
• Description
• Quantity
• Unit of measure
• Unit price
• Currency
• Discount
• Tax treatment
• Requested delivery date
• Delivery location
• Payment terms
• Delivery terms
• Packaging requirements
• Quality requirements
• Technical documents
• Project or manufacturing reference
• Approval status

The purchase order should reflect the approved requirement and selected quotation.

Changes made after approval should be visible. If the supplier changes the price, quantity or delivery date, the company must decide whether another approval is required.

Purchase-order statuses

A practical PO lifecycle may include:

Draft → Pending Approval → Approved → Sent → Confirmed → Partially Received → Fully Received → Invoiced → Closed

Other statuses may include:

• Cancelled
• Rejected
• On hold
• Overdue
• Disputed

Statuses help every department understand the real condition of the order.

“Approved” does not mean “delivered.”
“Sent” does not mean “confirmed.”
“Partially received” does not mean “complete.”

SIX PurchaseFlow keeps these stages visible.

Stage 11: Supplier confirmation

After receiving the purchase order, the supplier should confirm whether it can meet the requested conditions.

The confirmation may include:

• Accepted quantity
• Confirmed price
• Confirmed delivery date
• Delivery schedule
• Backordered quantity
• Substitution request
• Packaging details
• Transport information

The confirmed date may differ from the requested date.

This difference matters.

If Manufacturing requires material on 10 September but the supplier confirms 18 September, the production plan may already be at risk.

SIX PurchaseFlow provides current expected-delivery information so Warehouse, Manufacturing and other affected teams can react before the delay becomes an emergency.

Stage 12: Delivery scheduling and expediting

Expediting means monitoring an order to make sure the supplier delivers as promised.

It does not simply mean calling the supplier after the order becomes late.

Good expediting begins before the delivery date by reviewing:

• Supplier confirmation
• Production progress
• Required shipping date
• Transport booking
• Customs documentation
• Expected arrival date
• Manufacturing priority
• Inventory risk

Orders with long lead times or high operational importance require closer monitoring.

SIX PurchaseFlow helps buyers distinguish between:

• Orders expected on time
• Orders awaiting confirmation
• Orders with changed dates
• Orders partially delivered
• Orders already overdue
• Orders affecting critical demand

This allows Purchasing to focus attention where delay would have the greatest business effect.

Stage 13: Goods receipt

When a delivery arrives, the warehouse creates a goods receipt.

The receipt confirms what physically arrived. It should be compared with the purchase order.

The warehouse checks:

• Supplier
• Purchase-order number
• Item
• Quantity
• Unit of measure
• Packaging
• Visible damage
• Batch or serial number
• Expiry date
• Required documents
• Delivery location

The received quantity may be:

• Fully received
• Partially received
• Over-delivered
• Under-delivered
• Damaged
• Incorrect
• Rejected
• Awaiting inspection

SIX PurchaseFlow connects the goods receipt with the original purchase order. SIX StockFlow then records the inventory movement and warehouse location.

Partial receipt

A partial receipt occurs when only part of the ordered quantity arrives.

For example:

• Ordered: 1,000 units
• Received: 600 units
• Outstanding: 400 units

The purchase order should remain open for the outstanding quantity unless Purchasing cancels it.

This is important because Manufacturing may be able to begin with 600 units, but the remaining 400 units are still required.

Over-delivery and under-delivery

An over-delivery means the supplier delivered more than ordered.

An under-delivery means the supplier delivered less.

The company should define acceptable tolerances. Employees should not automatically accept additional quantities simply because they have arrived. Extra goods may increase stock, cost and storage requirements.

Stage 14: Incoming quality control

Some items can enter available inventory immediately. Others require inspection.

Incoming quality control may verify:

• Dimensions
• Weight
• Material composition
• Color
• Batch documentation
• Certificates
• Temperature
• Expiry date
• Packaging condition
• Technical performance
• Sample results

Until approval, the material may remain in quarantine stock.

This means the material is physically present but cannot yet be used, sold or promised.

The status distinction is critical:

Received does not always mean available.

SIX PurchaseFlow records the purchasing and delivery side, while SIX StockFlow manages the inventory status and SIX ManufacturingFlow sees whether the material is actually available for production.

Stage 15: Handling delivery exceptions

A connected procurement process must handle problems, not only ideal deliveries.

Common exceptions include:

• Late delivery
• Partial delivery
• Incorrect item
• Incorrect quantity
• Damaged packaging
• Failed quality inspection
• Missing certificate
• Wrong batch
• Short expiry
• Unapproved substitution
• Price difference
• Duplicate shipment

The response may include:

• Accepting the delivery
• Accepting it with a price reduction
• Placing it in quarantine
• Rejecting the full delivery
• Rejecting part of the delivery
• Requesting replacement
• Returning the goods
• Creating a supplier claim
• Requesting a credit note
• Changing the remaining order quantity

Every exception should have a reason and responsible user.

SIX PurchaseFlow keeps the problem connected with the supplier, purchase order and receipt. This creates useful information for future supplier evaluation.

Stage 16: Returns to suppliers

Goods may need to be returned because they are:

• Damaged
• Incorrect
• Defective
• Excess
• Expired
• Not compliant with specification
• Delivered without approval

A supplier return should identify:

• Original purchase order
• Original receipt
• Item and quantity
• Batch or serial number
• Return reason
• Warehouse location
• Transport responsibility
• Expected replacement
• Expected credit note

The returned quantity must leave usable inventory. Otherwise, the system may continue to show goods that are no longer available.

SIX PurchaseFlow and SIX StockFlow connect the commercial return with the physical stock movement.

Stage 17: Supplier invoice control

The supplier invoice should not be accepted only because it appears correct.

Finance should compare it with the approved purchasing and receiving information.

Two-way matching

Two-way matching compares:

1. Purchase order
2. Supplier invoice

It checks whether the invoiced quantity and price agree with the order.

Three-way matching

Three-way matching compares:

1. Purchase order
2. Goods receipt
3. Supplier invoice

This answers three different questions:

• What did we order?
• What did we receive?
• What did the supplier invoice?

Four-way matching

For quality-controlled purchases, a fourth record may be included:

1. Purchase order
2. Goods receipt
3. Inspection result
4. Supplier invoice

An invoice may match the order but still require investigation if the delivered goods failed inspection.

SIX PurchaseFlow connects purchasing and receipt information with supplier invoice control and financial processing.

Common invoice variances

An invoice variance is a difference between expected and invoiced values.

Examples include:

• Price variance
• Quantity variance
• Freight variance
• Tax variance
• Currency variance
• Discount variance
• Duplicate invoice
• Invoice for undelivered goods

Tolerance rules may allow small and approved differences. Larger differences should require investigation.

Stage 18: Landed cost and true purchase cost

The unit price does not always represent the final inventory cost.

Imported or long-distance purchases may include:

• Freight
• Insurance
• Customs duties
• Brokerage
• Port charges
• Handling
• Inspection
• Non-refundable taxes
• Packaging
• Internal transport

The complete amount is often called landed cost.

A simplified calculation is:

Landed cost = product cost + transport + insurance + duties + directly related import and handling costs

These costs may be allocated by:

• Quantity
• Weight
• Volume
• Item value
• Pallet space
• A defined allocation percentage

The correct allocation method depends on the type of cost.

Freight may be allocated by weight or volume. Insurance may be allocated by item value. Customs duty may follow the customs value and product classification.

SIX PurchaseFlow provides the purchasing records needed to connect supplier prices and additional charges with inventory valuation and finance.

Stage 19: Replenishment purchasing

Many purchases are created because inventory is approaching a critical level.

Common replenishment methods include:

Minimum and maximum levels

A minimum quantity triggers attention. The maximum quantity defines the target after replenishment.

A simplified rule is:

​_Suggested purchase quantity = maximum stock − projected available stock

Reorder point

The reorder point considers expected demand during supplier lead time.

Reorder point = expected demand during lead time + safety stock

Safety stock

Safety stock protects the company from unexpected demand or supplier delay.

Manufacturing requirements planning

Manufacturing demand comes from planned production quantities, Bills of Materials and required production dates.

Order-based purchasing

Some materials are purchased directly for a specific customer, manufacturing order, service job or project.

SIX PurchaseFlow connects these demand sources with Purchasing so buyers can see not only what to order, but why and when it is required.

Stage 20: Purchasing for manufacturing

Manufacturing and procurement must operate as one flow.

A Bill of Materials may create demand for:

• Raw materials
• Components
• Packaging
• Subassemblies
• External operations
• Production tools

The connected process is:

Manufacturing demand → Material requirement → Stock check → Purchase requisition → Purchase order → Goods receipt → Quality release → Production availability

Purchasing must consider the production start date, not only the final delivery date.

If production begins on 15 October and the material requires five days for inspection and putaway, it cannot arrive on 15 October. It must arrive early enough to complete those activities.

SIX ManufacturingFlow provides production demand. SIX StockFlow shows inventory and reservations. SIX PurchaseFlow manages sourcing, ordering and supplier delivery.

Stage 21: Purchasing for warehouse replenishment

Warehouse replenishment begins with the inventory position.

SIX StockFlow can show:

• Physical stock
• Available stock
• Reserved stock
• Quarantined stock
• In-transit stock
• Minimum levels
• Open demand
• Expected receipts

SIX PurchaseFlow uses this information to organize the supplier response.

This prevents two common errors:

• Purchasing too late because physical stock appears sufficient
• Purchasing too much because open supplier orders are not considered

Stage 22: Purchasing for sales and customer demand

A sales order may create demand for items that are not currently available.

Purchasing needs to know:

• Customer-required quantity
• Requested delivery date
• Available stock
• Existing reservations
• Expected supplier lead time
• Required warehouse
• Order priority

The supplier delivery date affects what Sales can realistically promise the customer.

By connecting Sales, StockFlow and PurchaseFlow, the company can make delivery commitments using current demand and supply information.

Stage 23: Purchasing for Field Service

Field-service teams require spare parts, replacement units, tools and consumables.

A service requirement may be connected with:

• Customer
• Appointment
• Work order
• Technician
• Equipment
• Warranty case
• Required service date

If the part is unavailable, PurchaseFlow can organize its procurement. When it arrives, StockFlow receives it into the correct central, regional or mobile warehouse.

This helps technicians arrive with the required parts and reduces incomplete service visits.

Stage 24: Purchasing for projects

Project purchasing requires cost and delivery control.

A purchase may belong to:

• A customer project
• An internal investment
• A construction phase
• An installation
• A technical milestone
• A cost centre

The purchase requirement, order, receipt and invoice should remain connected with the project.

This gives project managers visibility into:

• Committed cost
• Received cost
• Invoiced cost
• Outstanding orders
• Expected delivery
• Budget pressure
• Supplier delay

SIX PurchaseFlow can provide the purchasing chain while SIX Projects and Finance maintain the wider project and financial view.

Large-quantity and high-volume procurement

Large-volume purchasing requires more than multiplying the unit price by a larger quantity.

Important considerations include:

• Supplier production capacity
• Minimum order quantity
• Order multiples
• Storage capacity
• Shelf life
• Working capital
• Freight capacity
• Quality risk
• Delivery schedule
• Consumption rate
• Price-break quantities
• Supply concentration

Minimum order quantity

The Minimum Order Quantity, or MOQ, is the smallest quantity a supplier will accept.

If the business needs 800 units but the MOQ is 1,000, it must decide whether the additional 200 units are financially and operationally reasonable.

Order multiple

A supplier may sell only in fixed pack sizes.

If one pallet contains 240 units, an order for 1,000 units may need to be rounded to 1,200.

Scheduled deliveries

Ordering a large total quantity does not mean receiving everything at once.

The company may agree on:

• Weekly deliveries
• Monthly deliveries
• Production call-offs
• Deliveries by warehouse
• Deliveries by manufacturing phase

This can preserve the negotiated volume while reducing storage pressure.

Quantity discount versus holding cost

A larger order may reduce the unit price, but it also increases:

• Capital held in stock
• Storage cost
• Obsolescence risk
• Damage risk
• Expiry risk
• Insurance cost

The best purchasing quantity is therefore not always the largest quantity or the lowest unit price.

International procurement

International purchasing introduces additional complexity.

Important information may include:

• Currency
• Exchange-rate exposure
• Delivery terms
• Freight method
• Customs classification
• Country of origin
• Import duties
• Insurance
• Customs documents
• Port or terminal charges
• Longer lead time
• Supplier time zone
• Language
• Quality inspection before shipment

Delivery terms must clearly define who organizes transport, who carries risk and which costs are included.

PurchaseFlow should preserve these commercial conditions with the order so Warehouse and Finance understand what will happen when the shipment arrives.

Supplier performance management

A supplier should not be evaluated only when something goes wrong.

Useful supplier performance indicators include:

On-time delivery

On-time delivery = deliveries received on time ÷ total deliveries × 100

On-time, in-full delivery

OTIF = deliveries received on time and in full ÷ total deliveries × 100

Defect rate

Defect rate = rejected quantity ÷ received quantity × 100

Lead-time variance

This measures the difference between agreed and actual delivery time.

Purchase price variance

Purchase price variance = actual purchase price − planned or standard price

Response time

This measures how quickly the supplier responds to quotation requests, order confirmations and problems.

Invoice accuracy

This measures how often supplier invoices match the agreed order and receipt without correction.

SIX PurchaseFlow connects quotation, order, confirmation, receipt and exception information. This creates a factual basis for supplier reviews and future sourcing decisions.

Important procurement KPIs

Purchasing performance should be measured using more than total spending.

A KPI should lead to action.

A high emergency-purchase rate may indicate poor planning. Repeated late deliveries may require another supplier. Frequent invoice variances may show weak order control or unclear commercial terms.

How procurement changes between industries

The basic flow remains similar, but the controls change according to the product and risk.

The correct PurchaseFlow configuration should follow the company’s real purchasing risks. A routine office-supply order should not require the same controls as a pharmaceutical ingredient or custom industrial machine.

Best practices for implementing SIX PurchaseFlow

1. Clean supplier master data

Remove duplicates and verify legal names, tax information, contacts, payment details and commercial terms.

2. Define who may request, approve and order

Employees should understand their responsibilities and approval limits.

3. Connect every purchase with a business reason

Use the manufacturing order, stock requirement, service job, project or internal request as the origin.

4. Check stock and open supply first

Do not create another order without considering available inventory and existing purchase orders.

5. Compare total cost

Include freight, payment terms, lead time, quality and risk—not only unit price.

6. Record supplier confirmations

A requested delivery date is not the same as a supplier-confirmed date.

7. Monitor open orders

Review orders that are unconfirmed, changed, partially delivered or overdue.

8. Receive against purchase orders

Goods receipts should refer to the original PO wherever possible.

9. Record exceptions honestly

Do not receive the ordered quantity if less arrived. Do not mark damaged goods as available.

10. Match invoices with orders and receipts

Investigate material differences before payment.

11. Measure supplier performance

Use actual delivery and quality data rather than personal impressions.

12. Improve the process continuously

Repeated emergency purchases, delays or variances usually show a process weakness that should be corrected.

One connected process in SIX PurchaseFlow

The value of SIX PurchaseFlow comes from interconnectivity.

SIX StockFlow provides inventory levels, reservations, warehouse receipts and material movements.

SIX ManufacturingFlow provides BOM demand, production dates and material requirements.

Sales provides customer demand and expected delivery commitments.

SIX ServiceFlow provides spare-part requirements for appointments and work orders.

SIX Projects connects purchases with project milestones and costs.

Finance receives purchasing commitments, invoice information and actual costs.

PurchaseFlow brings these requirements into one organized procurement process:

Need → Approve → Source → Compare → Order → Monitor → Receive → Verify → Analyze

This removes the gap between the employee who needs something, the buyer who orders it, the warehouse that receives it and Finance that pays for it.

The business result

A structured purchasing and procurement process helps the company achieve:

• Clearer purchase demand
• Better spending control
• Fewer duplicate orders
• Reduced unauthorised purchasing
• Stronger supplier comparison
• More reliable delivery dates
• Earlier warning of shortages
• Better production continuity
• Lower emergency-purchase costs
• Accurate goods receipts
• Stronger invoice control
• Better supplier accountability
• Complete purchasing traceability
• Improved cash-flow visibility
• More reliable management reporting

Buy based on facts, not urgency

Poor purchasing is often reactive. The company notices a shortage, creates an emergency order and accepts whatever price or delivery condition is available.

Connected procurement changes this.

SIX PurchaseFlow gives the business time and information to act before a requirement becomes a crisis. It shows what is needed, why it is needed, what is already available, which supplier can provide it, what has been approved, when it should arrive and what was actually received.

The result is not simply faster purchasing. It is a more controlled supply process connecting demand, inventory, production, suppliers and finance.

Request clearly. Source intelligently. Order responsibly. Receive accurately.