October 31st, 2018 • Procurement Process • purchase order
When they are small, many organizations are satisfied by verbal commitments and email vows when making purchases. However, as the organization grows, so do its purchases and spend. During that time, purchase orders act as a security blanket that tracks purchases and enforces payment terms in case of a dispute.
Initially, paper-based purchase orders might come in handy, in addition to being easy to maintain. But in the long run, managing all the paperwork and storing and retrieving it securely creates way too much hassle.
The more purchases you have, the harder it is to track the purchase orders. That’s why it is essential to use a reliable purchase order system that meets your requirements.
However, creating an automated purchasing system is not as easy as firing up a spreadsheet program and entering your data.
Every ready-to-use PO system looks similar, making it hard to find one that has all functionality you need. While packaged software offers a limited scope for customization, a low-code workflow automation tool can help you create your own automated PO system in less than an hour.
A purchase order system is the software that manages your purchase order process, end to end. A good purchase order system will not only generate purchase orders swiftly but also track and manage all associated paperwork securely.
An automated cloud-based purchase order software eliminates redundancy from the purchase order process and improves purchasing efficiency.
If done right, a purchase order process system can significantly improve productivity and offer better visibility into organizational spend.
Investing in a purchase order system might not be the top priority of small businesses. The purchase order process could either be ignored as a mere back-office operation, or the purchasing volume might not be high or chaotic enough to demand technological assistance.
While a small business might not need an end-to-end procurement system that controls every aspect of purchasing, there are still important purchasing pitfalls to avoid such as duplicate purchases and overspending.
If you can build a purchase order system for your small business for a small cost, then it makes sense to build in the automated culture from the beginning.
Following these steps, organizations can create an automated purchase order management system from scratch using tools like Kissflow.
The first step to designing a good purchase order system is to create digital forms (purchase requisitions, purchase orders, etc). You can either create one from scratch or use automated purchase order templates to collect necessary information like order details, vendor details, item price, etc.
The form can either be simple or extensive based on the purchasing process. After creating a form, organizations can tweak it to perform anything from auto-generating purchase orders from purchase requisitions, to linking a vendor master database to display vendor list automatically.
The purchase order process may differ from one organization to another, depending on the policy and business needs.So, before automating the process on a purchase order system, you need to have a thorough understanding of the process flow and tasks involved. This also helps organizations identify redundant tasks and process gaps.
Once the digital form is ready and you’re aware of the tasks that need to be completed, it is time to create the workflow.
Depending on the process, you can make it collect data (input task) or allow the stakeholder to review the form and take action (purchase order approval).
For the requestor who initiates a PO, it will be an input task. For the finance staff who evaluates the purchase order by cross-checking it with allotted budget and inventory, it will be an approval task. Automated reminders will keep the process on track and complete it within deadline.
Once the workflow is ready, you need to assign stakeholders and set access permissions. Specific roles and responsibilities should be assigned based on the part a person plays in the purchasing process. Based on the role, visibility and access to confidential data might vary.
While the initiator who requested the purchase might need access to input purchase details, the manager and finance staff who review it only need permissions to view order details.
Even in case of discrepancies, they only need permissions to reject or send back the request, and not edit access to change the purchase requirements.
Your purchase forms are ready. Tasks are automated with a dynamic workflow, and the roles and rules are set. The final step is to publish the app and share it with everyone in the purchasing team.
However, it would be wise to release the purchase order process system to a small team of people who take part in the procurement process and ensure everything works like it should.
Once the purchase order process system is released to the wider audience, it will collect a lot of feedback. If your easy purchase order system, lacks just a few nuances, it would be wise to incorporate those suggestions and update the app.
But, if it lags in major functionalities or has process gaps, it would be better to withdraw the application altogether and work on improving it.
To enjoy the dual benefit of reducing manual labor in the PO process while improving its efficiency, organizations need to ensure that their chosen purchase order system comprises of these features:
Workflows should be customizable to fit your organizational policy and business needs
Security features that only allow specific stakeholders to access confidential information
A native cloud solution to ensure scalability, performance, and security of the PO system
Automated reminders that help stakeholders stay up-to-date on the PO processing status
Customizable visual-rich reports that speed up decision making with actionable insights
Online purchase order management systems are easy to set up, and they can untangle a messy purchase order process within a few hours.
Here are eight reasons why every organization needs a purchase order management system. The best purchase order systems will:
Not every business needs a complex and costly all-in-one procurement system. If you’re hassled all day with paper and email centric purchase orders, then Kissflow might be a perfect fit for you. However, Kissflow also lets you create an end-to-end procurement system by yourself.
With Kissflow, you are actually creating your own automated purchase order system with easy to use drag-and-drop tools and zero coding.
Kissflow extracts purchase order details easily from approved purchase requisitions and sends it to the approval loop without any human intervention. You can plug in your tailor-made purchase order system with other procurement software effortlessly. As your purchase orders are stored over the cloud, you need not lose sleep worrying about the security.