As it travels through your purchasing department, to the vendor, and then finally back to your accounting department for review and payment, a typical purchase order (PO) generates a lot of very useful information. But if you’re not using a purchase order tracking system to connect and verify all that data, you’re not just missing out on actionable insights, but losing valuable time, money, and resources to waste and needless risk.
In days gone by, a reliance on manual labor and piles of paper meant purchase order tracking was time-consuming, difficult, and almost impossible to monitor in real time. But thanks to new technology and a handful of proven purchase order processes, you can easily and affordably create purchase orders and then track them across their entire lifecycle.
What is Purchase Order Tracking?
When you monitor spend made with purchase orders, from the creation of the purchase requisition to the final reconciliation and payment, you’re using purchase order tracking (or purchase order management) system. They can be as simple as a spreadsheet and office suite or as complex as enterprise procurement software, but every PO tracking system shares common goals:
- Standardization to cut processing times, workflow delays, and errors. Ideally, real-time monitoring helps prevent problems before they begin.
- Reducing payroll costs and minimizing resources consumed.
- Improved document management, inventory control, supplier management, and process optimization. Every PO number connects its corresponding purchase order to every other related document in the transaction chain.
- Promote complete compliance with internal policies, negotiated contract terms, and all legal regulations across your supply chain.
- Promote overall organizational process improvement through value creation and lower total cost of ownership (TCO) for all purchases.
For modern companies, using automated purchase order software to speed up and improve their procurement processes makes a lot more sense. Artificial intelligence (AI) and automation free you from the errors, delays, waste, and inconsistencies that made paper-based PO tracking such a massive headache.
Old-School Purchase Order Tracking No Longer Cuts the Mustard
The traditional method of tracking purchase orders usually involved (and, for many businesses, continues to involve) paper-based tracking, piecemeal software solutions, or some blend of the two. Efficiency and productivity are improved greatly compared to “flying blind,” but significant roadblocks to serious savings and process improvements remain, including:
- Mountains of paper—and paper waste. Paper forms are expensive, difficult to create, correct, and store, and subject to human error—often in triplicate. Correcting a single error on a purchase order is a minor inconvenience; digging through drawer after drawer to find out what went wrong one or more times a day is a productivity and efficiency killer. In addition, paper-based purchase order tracking contributes to the two pounds of paper used daily—and the 10,000 sheets of paper used every year—by the average office worker. Considering that up to 70% of office waste is paper, all those duplicate copies quickly add up to a Godzilla-sized environmental footprint.
- “Hands-on” care required. Manual processing for purchase orders means every step, from purchase requisitions to final payment, has to be done by hand. Human intervention (and its associated potential for errors and omissions) means hours spent on data entry, error correction, and confirming important transaction details instead of higher-level, value-building tasks. Without automation, there may not be a consistent methodology for staff to follow, so no two employees may prepare, route, or file purchase orders in quite the same way. This also makes it difficult to create ownership for both specific roles and tasks and the potential bottlenecks that can disrupt them. Physical documents can get lost in the shuffle, and approval workflows can be disrupted by a single point of failure and oversight may be lacking.
- Time-consuming, expensive, and opaque workflows. Payroll and material costs can grow to unmanageable levels as the number of purchase orders to be processed grows. Additional expense is added by document storage, exception corrections, and internal and/or invoice fraud. Documents may be lost, misfiled, routed to the wrong party for approval, or sit unacknowledged for days, creating costly roadblocks. Invisible spend can create surprising budget overruns, duplicate orders, and missed opportunities for discounts.
For modern companies, using automated purchase order software to speed up and improve their procurement processes makes a lot more sense.
Artificial intelligence (AI) and automation free you from the errors, delays, waste, and inconsistencies that made paper-based PO tracking such a massive headache.
Automation Offers a Better Way to Track Purchases
Backed up to the cloud and accessible from tablet, phone, and PC, purchase order software lets you use artificial intelligence along with powerful, customizable tools like purchase order templates and automated workflows to trim the waste from your entire procurement function.
Your initial investment doesn’t have to be massive; you can start small, with a simple purchase order app that can be the core of your shift to digital or a welcome addition to existing enterprise resource planning (ERP), customer resource management (CRM), and accounting software. Virtualization and “always-on” access give small businesses the same powerful toolkit that used to be reserved for much larger enterprises.
Upgrading to automated, cloud-based purchase order management lets you:
- Build a user-friendly, staff-empowering procurement portal that takes the guesswork (and the gruntwork) out of buying while still ensuring compliance and profitability. Cloud-based apps can serve up training and documentation refreshers on demand, and enable real-time communication to allow for instant changes, additions, and corrections.
- Create purchase orders from templates. Every line item in each new purchase order is automatically populated with relevant vendor information, payment terms, contract specifics, and inventory management data pulled from the cloud. All documents (starting with the purchase request) are digital and can be electronically routed, manipulated, and stored. No more forest of wasted paper!
- Integrate hierarchical roles, access, and responsibilities across your procurement process.
- Manage vendors more effectively. Preferred suppliers can be pre-selected and automatically filled in on purchase order forms for everyday products (such as office supplies). However, contract information can also be pulled from the server to automatically provide a list of vendors who can best fill the pricing, delivery, and quantity/quality needs for larger or one-off purchase of goods and services.
- Speed and streamline approval workflows with automatic reminders. Real-time tracking of purchase order numbers from any device makes lost POs and random bottlenecks a thing of the past.
- Significantly reduce data entry, exemption tracking, and other low-level work to free staff for more strategic tasks.
- Centralize, connect, and verify all transactional data. Supply chain management, inventory control, and accounting processes are no longer isolated into standalone applications. Data can be used not just for purchase order tracking but negotiation, strategic sourcing and planning, and financial analysis—including reporting, projections, and detailed, comprehensive audit trails.
- Automate the bulk of the purchase order lifecycle to reduce human error. Risk exposure is also minimized through elimination of duplicate orders, rogue spending, and internal or invoice fraud.
Perfect Your Purchasing Department with Purchase Order Tracking
Staying ahead of the curve in today’s competitive marketplace means being ready to embrace what’s working—and jettison what isn’t. To get the most out of your procurement and make your purchase orders a source of value as well as spend, take the digital leap. Automation makes it easy to say goodbye to costly errors, wasted time, money, and resources, and the many productivity-sapping perils of paper. Changing how you track your POs can be the spark that ignites truly powerful, productive, and paper-free procurement for your company.