5 Effective Ways to Speed Up Your Purchase Order Cycle
From having been an afterthought addition in the ‘70s, procurement has come a long way. Today, it is arguably one of the most expense-intensive departments of organizations, across industry verticals and geographies.
Now that procurement is a firmly established part of organizations, an important concern is speed: how to get the procurement department functioning as smoothly and quickly as possible.
Since purchase orders are crucial to success, and because they can cause significant delays when mismanaged, organizations need a way to speed things up on the PO front.
Here are 5 ways you can get POs up and running quickly from requisition to order.
1. Appoint a purchase manager
Sometimes, all a business needs to give its procurement cycle a bump is to hire a purchase manager, if not a whole team. A purchase manager can keep a close eye on POs and make sure no order is duplicated or lost in old email threads, develop stronger vendor relationships, and get invoices cleared with consistent efficiency.
2. Build a leaner supply chain
You can transform your supply chain into a leaner, quicker and more efficient state simply by rationalizing the supply base. You can do this by reducing the number of vendors on your list. Doing this helps you reduce time wasted on less preferred vendors, and develop a leaner, optimized supply chain.
APQC is a non-profit organization that aims to help organizations improve processes and knowledge, and has been doing this for 40 years. Their study found that almost 80% of procurement departments go for regular appraisals of vendors. This means you likely already have the information you need to build a leaner supply chain.
3. Prioritize preferred vendors
As an alternative to kicking vendors off your list, you can choose to simply prioritize the ones your team prefers. This is a less-destructive means to the same objective: rationalizing the supplier base.
In this case, you spend time improving your business relationship with preferred suppliers alone. This drives supplier performance and is sure to speed up your purchase order cycle.
4. Review your purchase policies
Take a look at the way your organization handles procurement. Do you have a structured approach, complete with policies and work guidelines? Whether you do or don’t, here’s a look at what a policy-controlled approach to purchasing should look like.
- There is a clear line beyond which purchasing authority is restricted to approval from high-ranking team members
- There is a list of team members authorized to make decisions in purchasing
- There is clarity on what to do in case of a legal dispute/issue
- Conflict resolution with vendors follows a structured, consistent approach
- There is clarity on the number of vendors to consider before the procurement team picks one
Streamline Your Procurement Process With Kissflow
5. Incorporate digital procurement technology into your purchasing processes
Consider the ordering of materials and services, an integral part of procurement management in most organizations.
Some teams use the traditional approach–manually taking care of execution, manipulating, and transferring data through spreadsheets and email threads. Other teams use the digital alternative, letting a software solution take care of the predictable, everyday parts of the procurement process.
Many companies make the mistake of tacking on a self-proclaimed digital procurement solution, and expecting it to deliver results just because they spent money on it.
In fact, the right way to incorporate digital procurement into your PO cycle is to make sure the solution can cover the entire procure-to-pay cycle. This will eliminate data silos caused by disparate solutions for individual procurement processes like PO management or vendor management. For instance, Kissflow Procurement Cloud streamlines all the processes within the procure-to-pay cycle. This way, you make a much better impact on your POs than with the four other methods.
Just like method 1, your procurement software covers the discussed responsibilities of a purchase manager. It also helps you rationalize and build a leaner supply chain. In addition, a cloud-based tool also gives you the opportunity to review your purchase policies. Which means a solution like Kissflow Procurement Cloud is actually designed to cover methods 2, 3, and 4, while emulating the success of method 1.
How Kissflow procurement cloud helps your PO cycle
Through its library of fully built tools specifically made to handle the processes within the P2P cycle, Kissflow helps you digitalize, streamline and even automate your PO-related processes.
This is a tool designed to help your procurement team take care of its own efficiency. Take a look at the Kissflow Procurement Cloud demo and see if it works for you!