While every business has its own unique approach to common tasks and its own way of formalising and improving its processes, many businesses can benefit from implementing proven strategies and best practices. That’s why we’ve brought to you eight proven best practices when it comes to efficient purchase ordering to ensure the accuracy and control of your purchase orders (POs) and requisition.
Use dedicated software
It’s much easier to confirm and store purchase orders using a dedicated inventory management software, which will assign a number to your purchase orders. Great software like Unleashed has the capability to confirm POs, track and receive them.
Have a PO cancellation process
Accept only authorised cancellations in writing or via email. Purchase Order cancellation is serious and should be approached as such. Make sure to have a copy of the cancellation along with the original PO.
Control PO and Requisition costs
Make sure you know the difference between purchase orders and purchase requisitions. This will allow your team to keep purchase order costs under control.
Ensuring transparency of your POs can help control internal spending and costs, but also comply to external audits. Having easy access to every element of the PO, including the quantity of the purchase, availability, budget, as well as seller contracts and service level agreements made.
It is not uncommon for a PO to change. These changes, however, should be properly made and tracked throughout the journey so that everyone has visibility over the changes.
Keep PO documentation
While it’s tempting to discharge old POs, it is important to keep PO documentation for accounting purposes and audits in order to verify their accuracy. Put someone in charge of making sure proper purchase order documentation is in place and filed correctly. If you’re working paperless, make sure you know where to find all your pase purchase orders!
PO quality control
Each PO should be properly entered into the system and filed. This is where a quality control comes in to play to ensure all PO details are accurate, including price, item description, quantity, shipping details and so on.
The best step you can take towards more efficient purchase ordering is to use a centralised, automation-driven purchase order management system, either as part of an integration with your existing purchasing software or as part of a comprehensive procurement solution. Automation provides your business often with the complete set of tools you need to take full advantage of the best practices while simultaneously reducing or even eliminating headaches such as rogue spending, human error, filing and locating documentation, tracking and tracing POs to payments and reconciliation that can disrupt workflow. Your entire procure-to-pay process gains efficiency and productivity.
Purchase ordering is a vital activity and more so to keep this efficient. While many companies around the world have benefited by implementing software using e-procurement and application-based processing, there is much that can be done to control the flow and accuracy of POs. Whether purchase orders are controlled manually or technically, there are still some best practices that need to be followed. A reliable process should be put in place to ensure that the work is executed in a streamlined manner, leaving little room for errors.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. When not writing about inventory management, you can find her eating her way through Auckland.