Purchase Order Management: Why Automation is Business Critical

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For companies of any size, automating the issuance and receipt of purchase orders can help your customers monitor expenses and provide clarity on the details of an order for both parties.

 

In essence, a purchase order (PO) is a formal agreement that outlines the agreed upon details (more on that later) in advance of a purchase taking place.

 

In the past, purchase orders were printed and manually completed and routed for internal approval. Then, once the issuing company requestor has their PO approved, it had to be mailed, scanned and emailed or faxed to the receiving company.

 

The old-school paper method could take weeks to complete. It also left room for human error. In today’s fast-moving economy, this cumbersome method just doesn’t cut it anymore. In fact, you might even lose customers if you haven’t digitized your PO process.

 

The Number One Reason to Automate Purchase Orders

 

Digitally automating the issuance and receipt of purchase orders can help you speed up something that’s important to every customer: the time it takes you to process their order as well as delivery time.

 

When you electronically receive a purchase order, you can immediately earmark available inventory for that customer, send the order to the warehouse for pick and ship and alert your customer that you’ve received it and are processing it.

 

The more information you share with your customer, the happier they will be and you’ll receive fewer calls and questions that require customer support. This will help to increase customer repurchase rates as well.

 

Purchase Orders Can be Converted Into Invoices

 

The inherent benefit in an electronically-issued PO is that it can easily be converted to an invoice with the right workflows or better yet, a wholesale distribution software solution that has this functionality built in.

 

By automating the process of converting a PO into an invoice, it speeds up the process of invoice generation and removes room for human error if the process required manual entry.

 

Purchase Orders Help Your Customers Track their Spending

 

By adding your customer’s PO number to their invoice, that aids in your customer’s efforts to track spending against a project, for example.

 

Consider a global, large-scale project that requires spending from multiple departments and managers. In order for management to monitor spending on a project, a PO aggregates total costs to help managers ensure a project doesn’t go over budget.

 

Finally, what does a thorough PO include? It should include all the details of the sale that’s important to both parties. Let’s cover the most important elements in modern PO.

 

What an Automated Purchase Order Should Include

  • The item name and SKU number
  • The quantity of each item
  • The price of each item
  • Any additional discounts or terms of the sale
  • Delivery timeline
  • Payment timeline (i.e. - immediate or net 90)
  • Your PO (Purchase Order) number
  • PO requestor and approver

 

In summary, an automated PO process has benefits for your wholesale distribution business as well as your customers. If you don’t have this process automated and you’d like to learn how Systum’s order tracking software addresses this need, we’ll be happy to show it in action via a live demo. Request one below!

 

Categories: Customer Experience, Software, Inventory Management

Tags: purchase order, inventory, wholesale, distribution, inventory software

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Molly Mehlenbacher

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