Automation in purchasing order through items classifications: a case study in Finland

Abstract

ABSTRACT The aims of this study are to analyse the procurement process of a case company in Finland and to find ways to improve both the inventory level and purchasing efficiency. This study adopted both theoretical and empirical methodological approaches. In the theoretical section, it presented various models of modern purchasing and inventory management principles, whereas, in the empirical research, it is presented an implementation of an XYZ-analysis extension for the case company’s current ABC analysis. In this research, the case company’s year of worth of inventory requirements from six selected suppliers are analysed to create an ABC-XYZ matrix that is refined to a set of inventory management rules. The results from the ABC-XYZ analysis and the created matrix of rules, a proposal for an automated process with system suggestions is presented in this study. This automation system is based on the idea that low value items that have low number of fluctuations in their production demand can be automated to reduce the purchasing workforces. The study is concluded on the idea that the case company has the capabilities to implement an automated system basing on its current system capability, but it requires building new processes and purchasing or building a new supplier system to fulfill the proposed workflow.