When you’re managing a warehouse and trying to run a business, purchase orders can play a vital role in enhancing transparency throughout your entire organisation. They can help you track what’s going on through the simplicity of a single number. Whether you run a small business or you play a role in a large procurement team, tracking your purchase orders is key to streamlined efficiency within the business.
There are different ways to approach tracking purchase orders. Make sure you find a system that can connect every level of every transaction within the company. This will give you a better gauge of what’s going on, as it is a reliable and up-to-date monitoring system. It can allow you follow the procure-to-pay lifecycle and monitor the journey.
How to track your purchase orders
With real-time, cloud-based technology easily accessible now, the days of pens, paper and outdated spreadsheets have come to a close. Let’s say you ran out of permanent markers. Previously, you would have to get out a piece of paper, write down the quantity on an order form or ring up the procurement department to re-order. The paper would cross the hands of many people and teams, where copies would get made for the company, the supplier and the customer. The paper trail was rife, as the permanent marker supplier would need lots of information and the invoicing system required even more. Let’s just say we’re glad we’ve got the cloud.
Now, an inventory stock system can probably tell you when you’re out of permanent markers. An automated, online purchase order form can be generated to order more inventory stock. This electronic purchase order (PO) gets sent to the permanent marker supplier. Once the supplier gets the PO number, it automatically gets generated into their sales order management system.
The supplier makes sure they have the inventory stock on hand and processes the order, with the sales order and the PO number. After the sales order has been finished, an automated invoice is issued with the PO included on the electronic invoice. Once the customer receives the permanent markers, they use the tracked PO number to process payment.
Why tracking purchase orders is important
Purchase order tracking can be slightly complicated, but it is becoming smoother with electronic delivery and automation. Tracking a purchase order is important because it provides assurance to the supplier. It shows that the buyer has measures in place to pay for the order, and can track when a payment will be made.
Tracking a PO can help supplier check initial orders with what items were actually shipped. Tracking a PO allows a company to have visibility over what they are spending and what they need to be prepared to pay. If there are delays in the procurement process, tracking a PO through a real-time system can help identify where it is on the journey. Lastly, tracking a PO can also be a useful tool for internal and external auditing.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.