The Problem: Maverick Buying and Supplier Fragmentation
A mid-sized construction firm was bleeding cash in procurement. Each project manager ordered materials from their own preferred suppliers, often paying retail prices because they didn’t know the company had negotiated volume discounts. Invoices arrived with no purchase order match, and accounts payable spent hours chasing approvals. The procurement team estimated they were overpaying 18% on average for common items like rebar and cement.
How ERPNext Solved It
The company implemented ERPNext’s procurement module with strict purchasing controls. The key changes were:
- Supplier master and price lists – ERPNext stored negotiated prices for each item per supplier, and the system automatically selected the cheapest approved vendor.
- Purchase order (PO) requirement – no invoice could be paid without a matching PO, stopping maverick buying.
- Request for quotation (RFQ) automation – for items over a threshold, ERPNext sent RFQs to the top three suppliers and compared bids side by side.
- Three-way matching – PO, goods receipt, and invoice were automatically matched before payment release.
The Improved Result
Procurement costs dropped by 15% in the first quarter, mainly from enforced use of pre-negotiated prices. The accounts payable team now clears invoices in two days instead of three weeks. “We used to think we were paying market rates,” says the CFO. “ERPNext showed us exactly what we should be paying, and we started holding suppliers to their agreements.”