What Is Purchase Order Management? A Complete Guide

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According to research, most businesses spend about $77 to $92 per employee monthly on office supplies. With numerous tasks and a large number of workers, keeping track of inventory may be challenging.

Unfortunately, lacking a proper purchase order management system may cause a business to run out of essential items. Besides, last-minute buying without proper planning makes it challenging to observe a budget.

As a business owner or manager, it's essential to invest in proper practices and purchase order software. These measures will help you streamline workflow and avoid the challenges associated with procuring items.

Here, we provide the ultimate purchase order management guide. We'll also explain the benefits of this process and mention some techniques you can apply to simplify it.

The Process of Purchase Order Management

As businesses grow, placing orders for items needed by word of mouth or a simple email becomes inefficient. You may fail to include some of the things you need or request an insufficient amount. Following up with suppliers may also be a tiring and time-consuming process.

Purchase order (PO) management refers to the entire process of creating and sending requests for items you intend to buy. The document used for the procurement process usually includes details like:

  • Quantity
  • Unit and total price
  • Required delivery date and location
  • Billing address
  • Payment terms

The process of managing purchase orders starts with creating a list of things needed in the office. You may assign this task to your procurement team or specific administrative staff.

Once they create a draft, they will send the document to you or a manager for confirmation. This measure helps check if the order includes all needed items and their correct price and quantity.

The next step in PO management is sending the document to specific vendors. They will then confirm it and start organizing for delivery. The final stages are shipping, sending an invoice, and making payment as agreed on the purchase order.

The Importance of Purchase Order Management

Managing your POs has many benefits that can streamline workflow and reduce costs. First, this process lowers the risk of making errors when buying office supplies. These may include not ordering some essential items or making double entries.

Other than that, it allows you to track requisition requests and ensure timely delivery. With detailed orders, your suppliers will assemble items and deliver them in a relatively short duration. Further, they can avoid making invoice errors that may slow down the payment process.

Another benefit of PO management is that it helps plan for future demand. Since you can assess the number of office supplies used in a specific duration, it's possible to determine when to place another order. These details will also help budget in advance and allocate funds for all office expenses.

By managing purchase orders, you can ensure that all the supplies needed in the office are available. This measure increases employee productivity and reduces conflict in the workplace. The availability of resources also creates a conducive work environment and lowers the turnover rate.

Purchase Order Management Tips

Managing purchase orders may be hectic and increase the risk of errors. Still, adopting some tips can simplify the process and help you improve efficiency.

One ideal way to streamline the order management process is by involving employees. Instead of relying on the manager or procurement officer for acquiring items, train your staff on the process. This way, it's easy to identify the supplies they need that are not in the drafted purchase order.

Moreover, you give the staff more insights into business costs, prompting them to be more efficient when using resources.

Another tip on managing your POs is ordering office supplies or other items in bulk. Doing this reduces the per-unit cost and allows the company to benefit from economies of scale. It also lowers the time spent on contacting suppliers when procuring items.

More tips on purchase order management are:

  • Review your procurement process regularly
  • Use a simple order purchase process
  • Place orders using a projected budget

Failing to send orders within a reasonable timeline may affect business operations. If a delay occurs, you will have to buy some supplies at a possibly higher price while waiting for delivery.

Procuring items early enough gives you a convenient duration for order processing. You can also avoid rush buying by tracking inventory to determine the items you need before depletion.

Reasons to Invest in Purchase Order Software

Using spreadsheets can help you keep track of the entire procurement process. Still, purchase order management facts show that about 88% of these documents contain various errors. The most common ones are omitting zeros and having multiple tables with the same data.

The best way to simplify your procurement process is by investing in purchase order management software. These platforms have tools to help you streamline the requisition process in several ways.

First, they use artificial technology to check your previous orders. With this data, the software can provide a forecast report helping you identify all the items needed.

They also have integration features that help send documents via fax or email. You can also print hard copies and send them to relevant suppliers.

Other purchase order management software benefits include:

  • Better control of the entire procurement and paying process
  • Digital archives provide easy access to historical data
  • Improved data security
  • Easier internal approval for purchase orders

Some management solutions have advanced features that help you determine brands that offer eco-friendly items at a relatively lower price. Such information makes it easier to buy green products with proven efficiency. Besides, it allows you to save money and reduce the company's carbon footprint.

PO management software also saves previous orders, allowing you to save time that you would otherwise use browsing. They also mark various documents as received or pending so that you can easily follow up with suppliers.

Manage Your Purchase Orders With Raw Office

Investing in the proper purchase order management methods can ease running a business. At Raw Office, we provide programs to help you save money when getting office supplies.

With our purchase order software, you can identify eco-friendly products and make informed buying decisions.

We also offer free delivery for items above $50, allowing you to lower costs. Reach out to our team today to learn more about our programs and start shopping for green products.

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