Everyone loves automation.
It’s part of digital transformation, which even SMBs can take care of now because specialized software is coming down in price and integrations are everywhere.
Would you like to give your procurement team the tools it needs to improve their planning and forecasts over the next year?
Would you like to see how the right
Have you considered enhancing your purchase order management?
The right purchase order management software can pay for itself very quickly the more that you use it by not only automating the purchasing process but also giving your team more time to think strategically when managing supply chains.
Take a look at how automation can turn purchase order management from a headache to a breeze.
What is purchase order management?
Purchase order management talks about the part of your procurement process that lets your staff easily check whether each purchase is necessary, justified and optimized for your cash flow, budget and future projections.
For instance, a huge crate of 20,000 hex bolts looks great upon the initial inspection once it arrives at your facility. Halfway through the crate, as your team gets down into the layers of the hex bolts, a line supervisor notices defects that prevent your machinery from screwing in the hex bolts properly. The QA department needs to pull the defective equipment you just assembled off of the line, and your team has to empty out any of the defective hex bolts that are already in your equipment and ready for assembly.
Then someone needs to contact the supplier about the defective hex bolts. One of the supervisors, who works on the third shift, fills out a purchase requisition form to get a rush order of more hex bolts from an alternate supplier. Knowing where the previous order came from by looking at the label on the crate, the supervisor easily chooses a different supplier.
Upon getting to work at 7 a.m., the lead engineer for the production lines sees the alert for the requisition and the note left by the supervisor explaining why this is a problem. The lead engineer knows that he can get a refund from the supplier because he can see the contract right there in the purchase order software.
In just 15 minutes, he can see the refund amount he should get, requests logistics to ship the defective hex bolts back to the supplier, and approves the purchase requisition for a new batch of hex bolts as a rush order to get in three days, when the line gets back to normal.
Purchase order management comes into play when the purchase requisition request goes to the supervisor’s manager, the lead engineer overseeing five production lines. He looks over the electronic purchase order, makes sure the request is legit, and authorizes it for the price stated.
Easy Tracking With Purchase Order Management Software
You can track a purchase requisition request from start to finish with purchase order management software. It is NOT accounting software, which has limits on its reporting.
Who made the request? Did the person make a note explaining why the purchase requisition is necessary? Can someone flag the supplier as being faulty because of defects or higher prices? Who approved the purchase order request?
From the initial purchase requisition form to approval through to acceptance by the supplier to paying the supplier invoice after an automated three-way match process, purchase order software streamlines this part of your procurement process while reducing errors and creating automatic oversights.
That scenario we mentioned above might have taken a week or two to resolve using traditional paper forms. What if the person who could authorize the request was on vacation? Purchase order management software will send the requisition form to another person. Instead of one to two weeks, the line was back and running at full speed in three days due to a streamlined procurement process that still had the right checks and balances in place.
Purchase order management is an inherent part of the electronic purchase order process.
Get Meaningful Insights With Purchase Order Software
How many times have you kicked yourself when you say, “I wish we would have known that a month ago?”
While no single computer system can predict the future, it’s nice to have data insights you can turn to when trying to plan for procurement for the next quarter.
Purchase order management software collects and analyzes data all in one place to give your purchasing department a competitive edge.
Rather than focusing on mundane, day-to-day tasks of your purchasing department, your experts can get in a strategic mindset of “How can we prevent inventory problems six months from now?
Data analytics give your staff insights on how to reduce costs through several avenues, such as vendor relationships.
For instance, your lead engineer notices that prices for raw materials for making bricks keeps going up, and it has gone up for three months straight. After taking into account a rise in gas prices, the lead engineer still thinks something is amiss. Until he gets to the bottom of it, he goes into the administrative portion of the purchase order software to flag the supplier, which prevents people from ordering from this supplier. Meanwhile, he makes two other suppliers the preferred choices. After three weeks of negotiations, the original supplier agreed to lower prices.
Who knows how long this might have taken without purchase order software? Would the lead engineer have found out about this at all?
Benefits of Purchase Order Management Software
Your procurement process can get a major overhaul from the right purchase order software for your company. If you’re still using paper purchase orders, did you know that a single paper purchase order can cost you anywhere from $35 to more than $500 each to manage? That’s according to a report by APQC.
Simple Set Up in 24 Hours
You don’t need to be an IT expert to set up purchase order management software. It’s a cloud-based system with easy functionality that guides you through a purchase requisition, approvals, inventory, suppliers, and more.
You can customize the platform to match your company’s processes, including built-in formulas, alerts, and permissions for maximum ease.
Administrators set or revoke employee permissions, including any new hires or outgoing staff. Learning is easy with training modules available within the purchase order software itself.
Streamline Purchase Orders & Purchase Requisitions
You can monitor purchase order workflows in real-time. Are there blockages holding up fulfillment of orders? You can get alerts for that to minimize disruptions to your plant’s operations. Adding new suppliers or supplier catalogs? That’s easy.
For instance, your procurement team recently negotiated new contracts with several suppliers based on activity they saw in your purchase order software. To mitigate issues with higher prices later, they also looked into adding two new suppliers in case of disruptions. With streamlined templates that allow staffers to add or remove suppliers from the database, it’s easy to add supplier information with just a few drop-downs, form fills, and clicks.
This saves time later in the process when people fill out purchase orders and purchase requisitions because the vendor information fills in automatically. Rather than spending two minutes filling out address and contact information with a traditional paper form, your staff can fill out all of that information in about five seconds.
After this, you can track the progress of purchase requisitions to compile and compile all information relating to them over a certain time period, with specific vendors, or to see a current snapshot of budgets and purchases yet to be made if there are future investments you’re thinking about making.
What are some core functions of purchase order management software?
Depending on your needs, your chosen vendor for purchase order software can give you basic purchase order management capabilities or the white glove treatment with everything.
PO Creation & Automation
Authorized staffers can select from purchase order templates, pre-populated with the right information, or you can let them make custom orders using valid vendors.
For example, line supervisors can create purchase orders with the title “Standard Order” for their biweekly requisitions of 10,000 wood screws. Or they can create one for “Emergency Order” when they get a bigger order from a customer and they need a rush job for more materials.
Similarly, line supervisors can have standardized purchase orders that fill in the company name while an employee fills in the rest using drop-down menus.
Purchase Order Tracking
Following the successful PO creation and approval of a purchase requisition, your PO management system allows users to create one automatically for next time as a template in case a similar situation comes up. At this point, you can achieve even greater labor savings the more times you use the template.
Managing Supplier Invoices
Purchase order tracking still needs three-way matching to verify that everything is in order. Use the PO number to match it with the supplier’s invoice and what accounts receivable shows. Thanks to automated procurement processes, this happens automatically within your PO management software when you set up those parameters.
A paperless system stores everything for you to see and analyze later.
Supplier Management & Contract Negotiations
PO management software seamlessly integrates all information about suppliers, including purchase history, discounts, spending limits, delivery times, and price changes. You’ll also have leverage to negotiate new contracts based on the data you receive thanks to real-time and ongoing data tracking.
Automate PO Processes & Simplify Your Procurement
Automate your PO processes and key procurement processes with purchasing software that fits your requirements.
ControlHub can help your team spend less time on mundane, administrative tasks associated with purchase order management. Meanwhile, staff can spend more time on value-added tasks, such as coming up with insights to manage vendors and expand your supply chain.
Utilize purchase order software to enhance and complement your existing procurement process or overhaul how you perform procurement at your company. This upgrade is a win-win because it makes your staff more confident in the purchasing process while giving you insights to plan for the future.
Contact our team today to request a demo. We’ll show you how you can elevate your procurement game.