Purchase order tracking is an effective way to track and manage transactions across a company and ensure you have oversight of all expenditure. While businesses have tracked purchased orders manually for a long time, there are some key drawbacks to this method. Instead, we suggest automating the process with inventory management software. In this article, we explore what purchase order tracking is, its benefits, and how you can use new technologies to make the process more efficient and accurate.
What is purchase order tracking?
Traditionally, a purchase order is created when, for example, an employee has run out of item A, and needs to order more. To kick off the process, the employee will first fill out a paper purchase requisition and send it off to a supervisor or other relevant party for review and sign off. Once the purchase requisition is accepted, it’s usually forwarded on to the purchasing department.
At this stage, the department creates a purchase order (PO) which outlines the details of the order (item, quantity, etc) along with the terms, conditions, pricing, and any other essential information. Depending on what is required, sometimes multiple copies of the PO will be created for different purposes (for purchasing records, or a copy for sales, for example).
Next, the purchaser will send a copy of this PO to the supplier. Upon receiving the order and invoice for payment, the PO can be used to double-check accuracy and ensure any adjustments are made for damage, delays, or errors. It only after all of this checking and documentation is completed that the payment will be made. While this process has indeed worked for businesses for a long time, there are a few drawbacks of this manual process. For starters, it entails a large amount of paperwork, record keeping, documentation and cross-referencing. Not only does this take a long time to carry out, but it is also very error-prone. Especially as a business grows and sales increase, manually keeping track of each PO can be very difficult to do efficiently.
Since each employee may have a different way of recording POs, when it comes to retracing your steps, you may run into trouble. Further, inaccurate recording keeping of POs can wreak havoc on the company, leading to disappointed customers who may experience delays, inaccurate stock records and more. While many small businesses do just fine while inventory and sales are relatively slow-moving, any company that is experiencing growth should consider automating the purchase order tracking process.
An easy and effective way to shift to automated purchase order tracking is to download inventory software. Inventory software will allow you to not only track stock an inventory accurately, but it will also create POs in seconds, and this information will always be available to you anywhere you have internet access and a compatible device. Rather than wading through paperwork, your POs will be available at the touch of a button.
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.