What Is Purchase Order Automation? (And How to Do It Right)
The success of your purchase order process is directly dependent on how efficient and effective its systems are. However, you cannot achieve optimal efficiency without the benefits of automation. If you want to scale your procurement process, then you need to invest in purchase order automation.
To help you make the right decision, this post will discuss what purchase order automation is, its benefits, and how you can transform your PO process into a streamlined success in the fastest, easiest, and most affordable way possible.
What Is Purchase Order Automation?
Purchase order automation is the use of software to streamline the purchase order approval process using an automated platform.
Instead of using paper-based purchase orders and manually requesting approval, you use a centralized system to send out a templated purchase requisition form to the appropriate team member for approval. After, the system sends the PO to the vendor through your ERP. It's easy.
This removes multiple manual steps from the process. For one, you won't need to manually fill out, email, print, or file and purchase orders. For another, you won't need to ask management to approve each PO manually either.
With PO automation, your entire purchase order process happens in a digital environment with minimal friction. In short, it's the best way to scale purchasing in your organization.
Why You Need to Automate Your Purchase Order Process
Filling out a purchase order is a fairly standard process. While there may be some variation between businesses (because each one is unique), the goals are the same. When a business is small, POs are infrequent enough to cause enough waste to be noticed. However, after a business grows, inefficiencies become noticeable.
There are plenty of downsides to manually processing purchase orders:
- Lots of risk from costly errors
- Data entry is time-intensive
- Employees waste time on menial tasks
- The system is completely dependent on team members
- Bottlenecks form at every approval stage
If your team is frequently filling out purchase orders manually, it's time to scale their efforts and free them from menial tasks. Rather than rely on a dated, manual process, you can transform your purchase order process with automation.
Using a purchase order automation platform, you can choose which employees can submit POs and pre-approve their budgets. You can also white-list vendors. Once you have your guardrails in place, your team simply needs to use the platform to file a PO.
As long as the PO is within the guardrails, the system will automatically approve it. If not, the system flags it as an exception. Management receives an alert. And they'll need to manually review the PO before approving it.
This system keeps everyone accountable while eliminating the need for bogging down the process with manual steps at each stage.
Using Pre-Built Purchase Order Templates
You don't need to reinvent the wheel. There are a wide variety of pre-designed purchase order templates out there. Whether you choose a custom solution or a turnkey one, you can easily find the PO template you need.
Most of the time, the basic purchase order template usually works well. However, in some cases, a customized template might also be required. Either way, your pre-built template will help streamline your future purchase orders.
The purchase order form is vital. It's that initial source of communication between you and your vendor. As such, it should cover everything your team and your vendor needs to successfully carry out the purchase order:
- Your company details (Legal name, address, billing information)
- Delivery address
- Product details (SKU, code, name, and/or description)
- Product quantity
- Agreed on pricing
- Requested delivery date
- Payment terms
- Summary (Subtotal, Taxes, Shipping Costs, Vendor Discounts, & Final Total)
With the right purchase order template, you can save time by collecting the relevant information, reducing unnecessary back and forth. You can also reduce the risk of mistakes.
In the end, an effective purchase order template strengthens the relationship between supplier and business by strengthening the communication between the two groups.
And when you combine the right template with the most effective purchase order automation system, the benefits are profound.
The Benefits of Purchase Order Automation
Automating your purchase order process opens the door to a range of benefits for your organization. Here are a few.
- Easier to Scale: With an automated system, you won't need more people and time to stay on top of your workload.
- Save Time & Money: Automation streamlines the time-consuming tasks, giving your team more time to focus on meaningful tasks while reducing costs.
- Reduce Error: Human error happens because people make mistakes. Automating your PO process reduces risk because everything operates within a predefined and approved system.
- Less Risk: Purchase orders are legally binding contracts. Automating the process ensures that you don't over/under the order or pay. Plus, it's more secure.
- More Visibility: PO automation keeps your data centralized and your systems integrated, giving your real-time reporting and complete transparency.
Purchase Order Automation: How to Do It Right
All in all, purchase order automation is surely a valuable tool that can help you scale your growing business. The benefits are clear. But, it's not always easy to get started.
Whether you go with a turnkey solution or a custom purchase order automation system, there's a level of risk. For one, any new system requires an investment. And you'll want to be certain that your investment will pay off in time and resources saved. However, there are also the risks involved with onboarding new software. You also have to account for any potential downtime from the transition.
Luckily, low-code can help make the transition to an automated purchase order system much, much easier.
Low-code is an easy way to rapidly build, deploy, and test applications using a drag and drop visual interface. In short, it empowers businesses of all sizes and budgets to build the custom software solutions they need without waiting months or burning through their entire IT budget.
If you're looking for a simple purchase order automation solution, then you should consider investing in a low-code solution. Using low-code, we've helped businesses of all sizes build the custom solutions they need to streamline their business, scale growth, and drastically reduce costs.
See how we've helped our clients improve their businesses and get insane ROIs by checking out our case studies below.