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HomeBusiness21st Century ChallengesHow Digitalization of the Purchase Order (PO) Can Save Time and Money

How Digitalization of the Purchase Order (PO) Can Save Time and Money

To all procurement and logistics specialists, how many of your daily emails pertain to purchase orders? With so many emails there is margin for error due to the manual inputs of the operation. Numerous details are manually recorded, such as the products needed, quantity of items, descriptions, pricing, payment details, delivery methods and dates. Many companies have not automated this fundamental Purchase Order operation. Automation of purchase orders is an important first step to a digital transformation.

Specifications on a Purchase Order (PO):

  • PO Number
  • Purchase order date
  • Vendor name and billing address
  • Buyer name and shipping address
  • Additional contact information, such as phone numbers and email addresses
  • Delivery date
  • Shipping method
  • Item name
  • Item description and technical information
  • Item quantity
  • Item unit cost
  • Taxes
  • Total price
  • Payment terms

A Purchase Order Management System benefits importing and distribution businesses, especially those sourcing globally.

Complications may arise due to language barriers, differences in metrics, and classifications. This can lead to mistakes in the fulfillment of orders and invoicing. With a Purchase Order Management System, you can examine and control all your PO information in one dashboard. Cloud-based capabilities allow access to the POs and associated invoices at any time.

Here is a general scenario of a manual Purchase Order (PO):

  1. Create a purchase order
  2. Send out multiple requests for quotation (RFQ)
  3. Analyze and select a vendor
  4. Negotiate contract and send PO
  5. Receive goods/services
  6. Receive and check invoice
  7. Authorize invoice and pay the vendor
  8. Record keeping
  9. Purchase order closing

The manual process can be very cumbersome and leaves room for error-prone POs. Paper-based filing systems, emails, phone calls, and spreadsheets can lead to several challenges. In today’s market, speed and efficiency are vital to replenishing inventories. Lack of visibility and dependency on manual input can drag out the PO processing cycle. Procurement specialists may experience delays with email response times, phone hold times and other manual inefficiencies.

A digital PO system helps create a database of the products that an organization imports.

As a result, communication management with suppliers is vastly improved. Purchase Order processing speeds are enhanced as orders are streamlined. Efficiencies are improved as there are no lost or delayed POs. A user interface with an intuitive dashboard will make searches one or two clicks away. Vendor management is boosted as they can submit their own quotes and invoices, leading to quicker approval times.

Transitioning to a digital PO system will automate processes, saving time and money. Procurement specialists can then focus their efforts on essential tasks, planning and executing. Rather than reviewing endless emails, paperwork and tedious manual data entry.

Marc Holder
Marc Holderhttps://www.mts-logistics.com
Marc Holder was born and raised in Dallas, TX. He graduated from The University of Texas at Dallas with a Bachelor’s in Business Management. His career in logistics began in 2013 with one of the major Steam Ship Lines, Evergreen Shipping. This is where he learned the fundamentals of ocean shipping as a Vessel Coordinator. Marc then joined the sales team for U.S. Imports/Exports in the Gulf Region. He has now been working at MTS Logistics as a Sales Executive since September 2019. Marc believes in providing great customer service and attention to detail. Fun Fact: Marc loves playing baseball, basketball and hiking new trails.
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