Getting Purchase Order Management Right in 2018

Shivasankari Bhuvaneswaran

September 17th, 2018 Procurement Process   purchase order  

Purchase Order Management

Organizations waste way too much money and time pushing paper to process purchase orders. Retrieving meaningful insights is practically impossible because of the paper-driven process and disparate data blocks.

Every business makes a considerable amount of purchases from external vendors on a daily basis. Most organizations use purchase orders (PO) to document and authorize every purchase. Conventional paper-based purchase orders end up complicating the procurement process.

A purchase order documents information like items to be purchased, quantity, unit price, discounts, vendor details, payment terms, and fulfillment date. While documenting this information is essential and useful, a recent study by APQC suggested that depending on the industry, manual purchase orders processing can cost as much as $506.52 per PO (Source:SupplyChainDigest).

The true reason behind these inefficiencies? The process has remained unchanged for the past several decades despite the evolution of the business environment. Employees have become more tech-savvy, and there’s a spike in the technological solutions. It’s about time organizations move from their outdated purchase order process to a digital and modern approach.

This transition will help organizations go a long way in getting purchase order management right in 2018.

Purchase Order Management – Process and Steps

The purchase order management process is filled with multiple checkpoints and repetitive steps for optimal processing. If left unchecked, these are capable of dragging the purchase order cycle much longer than necessary.

While the purchase order process might be unique to every organization, the process flow is pretty consistent. A typical purchase order management process will follow the process flow listed in this flowchart.

Purchase Order Management Process

Initiate PO:

Once a purchase request is approved, it is converted to a purchase order by the purchasing team and an approval process is initiated.

Approval Cycle:

In the approval phase, the purchase order is matched with the purchase request. Budget and document checks are performed.

Dispatch POs:

After the approval of purchase orders, they are dispatched and forwarded to the vendor, provided vendor selection is already taken care of.

Invoke Contract:

Once a vendor reviews the PO order and accepts it, a binding legal contract is invoked. By its terms, the vendor should deliver the order within the deadline and the buyer must fulfill payment terms.

Receive Shipment:

The vendor will include an invoice with the shipment. After delivery, the buyer is expected to examine the shipment and notify the sender of any defects.

Run Matching:

Before fulfilling the payment terms, the purchaser performs a three-way matching to verify data consistency across documents (purchase request, PO, and invoice).

Close PO:

Once the purchase order is used for invoice approval and no discrepancies are found in the invoice, the purchase order is closed.

After closing a purchase order, the usual procurement process cycle follows.

Managing Purchase Orders Manually?

Automate Now. Save Time, Cost and Effort

Steps to Automate Your Purchase Order Management Process

1. Install App

Install the purchase order app from the list of 48+ pre-built workflow apps.

Install the Purchase Order App

2. Customize the App

Customize the purchase order process as per your organization’s needs with easy, drag-and-drop forms and advanced KiSSFLOW features. Add formulas, conditions, exceptions, etc.

Customize PO App

3. Implement the Purchase Order Process

Define the workflows, set permissions, make the apps live and get rid of papers, emails and sheets to manage your purchase orders.

Implement Purchase Order Process

4. Track Progress

View the status of every purchase order and quickly spot bottlenecks. Make real-time changes to create a seamless experience.

Real-time PO tracking

5. Improve the Process

Use analytics, reports, and metrics to find new ways to make your PO faster, more accurate, and easier to use.

Improve the PO process

No More Emails and Paper Trails

Process Your Purchase Orders in a Jiffy

Purchase Order Management Best Practices

Here are some best practices that will help you finetune your purchase order management. To streamline a purchase order management system, every organization needs to focus on three major segments.

1. Process

If your organization is still using paper forms, emails, and spreadsheets to process purchase orders, then you’re at a severe disadvantage. Forcing your purchase orders to pass through paper trails and outdated tools will only slow down the processing speed and pile up the number of backlogged requests.

To speed up purchase order management, organizations need to move away from a people-driven process and embrace technology. Technology can streamline the purchase order management process and ensure purchase orders are raised, approved/rejected, and processed on time.

2. Technology

Purchase order automation will help organizations save a significant amount of time, effort, and resources. Although the cost per purchase order varies with industry, automation can decrease the processing cost and time by up to 75% per invoice.

An online purchase order system doesn’t just speed up the process and boost productivity, it also optimizes an organization’s spend culture.

A robust purchase order management software:

  • Eliminates paperwork
  • Speeds up process
  • Reduces human dependency
  • Decreases administrative work
  • Keeps the process transparent
  • Ensures consistency and accuracy

Automating purchase order management might have earlier taken months or years, but cloud-based workflow automation tools make the process a breeze. You can automate purchase order management in less than an hour with KiSSFLOW’s online purchase order software.

3. Change Management

Charles Darwin once said, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”

Similarly, the process owners and IT team can do all they want to overhaul the process and automate it. Simply implementing a brand-new software doesn’t promise results, though.

Organizations need to remodel business processes, customize the workflow, and bring their staff up to speed. There won’t be any positive impact unless change is embraced by the employee ecosystem across the entire organization, without resistance.

Think Automation. Think KiSSFLOW.

Moving your purchase order management process to a cloud-based workflow automation solution will make the process cost-effective and efficient. User-friendly purchase order automation solutions like KiSSFLOW can help businesses create a future-ready purchase order process. The digital forms in KiSSFLOW eliminate the need for paper forms.

In KiSSFLOW, automated notifications remove the need to keep track of the purchase orders manually. Customizable workflows reduce manual intervention in the process. The cloud documentation feature makes document storage, retrieval, and access effortless. Seamless API integration enables easy information interchange with other procurement software.

Still on the lookout for a purchase order management software that helps you take back control of your purchase orders? Give KiSSFLOW a shot, and see how easy it is to create a dynamic purchase order management app without coding

Automate Your Purchase Order Process in Minutes

Say Goodbye to Cumbersome Manual Processes