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One mistake that small companies make when they start is to neglect establishing a database of their act..." />

Make Sure You Have a Good Database

Date: 08/01/2010

One mistake that small companies make when they start is to neglect establishing a database of their activities. The longer the delay in postponing the collection of data in an organized fashion, the higher the cost to the business. The need for historic information is usually first recognized by accounting and finance operations. Marketing people are often next in line to see the importance and usefulness of good data. In too many cases, the purchasing operation is slow to take advantage of the organization’s database.

The sources of data are available from every type of business activity, but entering the data into the computer is a perceived expense that small and young organizations are reluctant to take. Delaying data entry increases the cost and can prevent capturing important information. Setting up a good system early means incurring only a small expense for each day, week, or month. Over a period of a year or two the database will provide enough information to make better decisions and help reduce the cost of doing business far more than the cost of setting up and maintaining the system.

A well designed and reliable database provides information that purchasing personnel can use to improve every aspect of buying activity. Good data makes it easier to qualify and select suppliers. It makes it easier to evaluate both buyer performance and supplier performance. It provides information to help with negotiations. It provides information about the number of rejects and their causes. It provides information about short and long term cost changes of various products and product categories so action may be taken where improvement is required to meet budget or profit objectives.

Maintaining the accuracy of the database is necessary for meaningful information. The design of forms and entry screens helps minimize errors. So too does the design of the software to catch obvious errors. For example, to provide warnings before accepting unlikely dollar amounts that are entered. Random audits need to be conducted to catch errors, measure their frequency, and cause.

Any organization should benefit from a transaction database and the purchasing operation benefits as much as any other department, if not more so.