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How to Speed Up Your Purchase Order Process

07 Jan, 2021 | Business Tips, Inventory Management

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No matter how big or small your company is, your purchase order process has the ability to make or break your business. Having a slow purchase order process can be the difference between ensuring all customers are satisfied or losing a whole section of your audience. Many companies turn to a number of different methods and software to help improve their purchase order process, but if done incorrectly, it can prove devastating.

Ensuring that your purchase order process is fast and efficient is one of the quickest and most effective ways to grow your business. If you find that your business has been struggling with your purchase order process for a while, you might be wondering what is left to do. Here, we’ll break down everything you need to know about speeding up your purchase order process so that you can make sure your customers are happy, you have a good relationship with your suppliers, and you’re running a business that’s as cost-effective as possible.


Standard Purchase Management Process

Before we can break down how you can improve your purchase order process, we should start by discussing what a typical purchase management process looks like for many companies. Managing purchase orders isn’t as simple as placing an order with your supplier and waiting for the product to come in. It also involves comparing your customer demand to the amount of inventory you have or need, managing your shipping and freight needs, tracking the fulfillment of your orders to make sure they come in at the right price and the right time, and reporting all of the data to ensure your business is cost-efficient.

Some smaller companies are able to handle all of these tasks on their own, maybe with a few employees tracking orders on pen and paper. However, as your business starts to grow, you may find that you need to turn to software to keep track of your expanded needs. Adjusting your purchase order process as your business grows can not only ensure that your customers stay happy, but it also guarantees that you will save time and money on the hours you used to spend tracking your data manually and correcting human errors that may arise in the process.


Defining the Purchase Order Cycle

In this conversation, it’s also important to define the term “purchase order cycle.” When we say “purchase order cycle,” we are referring to the cycle from beginning to end, starting when a purchase requisition line item is received to the time the purchase order is transmitted to the vendor or supplier. Your typical purchase order cycle involves the following steps:

  • Creating a purchase order
  • Checking the budget and creating requests for proposal (RFP)
  • Selecting a vendor
  • Negotiating contracts and dispatching the PO
  • Product delivery and standard quality check
  • Matching and closure of the PO

When many people think about the typical purchase order cycle, they think about it in a manual fashion. Individual employees manage every aspect of the purchase order cycle, leading to potential delays, tons of extra paperwork, and added stress on yourself and your staff. However, using a digital purchase order system can allow you to improve your processing speed, more efficiently communicate with your vendors, and enhance your company overall.


Benefits to an Efficient Order Management System

Creating an efficient system for managing your purchase orders at every step of the process above is vital to saving your business time and money. Without a purchase order system that works for your company, you may face late deliveries, delays in orders (which leads to delays for your customers), and overspending.

However, with an efficient purchase order management system, you’ll be able to ensure that you are under budget and on schedule at every step of the process. You’ll have a better understanding of your current inventory levels, guaranteeing that you are only ordering as much product as you need, and you’ll be able to forecast upcoming demand to order more or less of a project to meet the future requests of your customers.

Since purchase orders are such a vital part of any business, creating an efficient management system is key to making sure that your business is effective in all areas. For instance, if you are able to report stock levels correctly and avoid overspending on extra product, you can pass those savings on to your customers or funnel the extra money back into improving your company. It’s amazing what something as seemingly simple as improving your purchase order process can do to boost your business overall.


How to Improve Purchase Order Time


We spoke a little bit earlier about how creating an efficient purchase order process can save you time and money all around. One of the easiest ways to do that is by turning to automation. If members of your team and those in your vendor’s team are automatically able to see any request or order that might be in the works, it saves you the time of having to reach out to the vendors yourself. You’re also saving man hours by letting your software do the hard work for you, and you’ll eliminate the possibility of human error.

Turning to automation also ensures that you’ll have greater visibility over your orders, as you can track any purchase order at any given time. Finally, you’ll also have better control over your POs, as your software will only allow your vendors to request payment through pre-approved accounts.

There are a few different ways that you can integrate automation into your purchase order process. First, allow your employees to see the budgets you’ve set for purchase orders, and if any of your departments aren’t meeting the budget, speak with them to fix the problem. Talk to your vendors about advanced contracts with “pre-approved” items that you frequently order, and designate a couple people on your team to watch over the process so they can step in in case anything does go wrong.


Next, we’ll move on to optimization. Particularly as your company grows, your supply chain is only going to get more and more complicated.  You’ll wind up integrating more technologies into your business, signing contracts with additional vendors, and bringing more people onto your team, making the supply chain vastly more complex. While it’s a great thing to have supplier diversity, it might get complicated keeping up with different purchase orders and contracts for different vendors.

To make sure that you don’t sacrifice quality but still get the best price possible, analyze what you’re spending on your suppliers versus their performance and capability for your company. Is the cost you’re spending on them worth what you’re getting out of it? Would there be any way that you could find the same quality products with a less expensive vendor or someone who can get you your products more quickly?

Asking yourself these questions can help to improve your fulfillment rates and guarantee accurate product availability. When this step is combined with the above step of automation, you’ll find that you can collaborate with your vendors more easily to ensure your business relationship is beneficial for all.


Our final step is reflection. Particularly if this is your first time analyzing your purchase order process, it might be overwhelming. You may not know what exactly to change or if you’re making the right moves. Take the process slowly and don’t make too many changes right off the bat. That way, you can look back at the end of the quarter and see if your decisions have truly resulted in improvements.

Running a business can be complicated, but enacting changes to improve your purchase order process is a great way to keep your company competitive and ensure its success for years to come. Throughout the life of your business, takes the time to reflect on your purchase order process and identify any places where it could improve. The ideal purchase order process for your company is bound to change as it grows, so this is certainly an aspect of your business that is worth returning to again and again.


Top-Quality PO Management With DEAR Systems

There are tons of technologies out there that are designed to help businesses improve their purchase order process. With DEAR Systems, your company can tackle this issue and so many others. Our cloud ERP system is designed not only to assist with purchasing but also has features like POS, manufacturing, eCommerce, accounting, and more. We are proud to serve clients from around the world and in all kinds of industries, providing that our unique and innovative software can be molded into whatever your business needs it to be.

Not only will you get the benefits of a high-quality cloud ERP system, but you’ll also have DEAR’s dedicated team behind you every step of the way. Use technology to your advantage and let us help you grow your business. Contact us today to learn more or to start your 14-day free trial!

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