Procurement 101Purchase Order Tracking: 3 Ways to Track Purchase Orders in 2020
Is your business implementing purchase order tracking? If not, it’s time to start, even if your company is still growing.
In fact—particularly if it’s growing.
Purchase order tracking is essential for successful procurement. What’s more, research has shown that effective purchase order tracking increases overall organizational performance.
However, purchase order tracking, if not done correctly, can get messy. This is especially true if you are doing it the old fashioned way. This is why we want to share with you a couple of ways you can start implementing purchase order tracking in 2020.
If your company has yet to set up purchase order tracking, or is drowning in an administrative mess around its purchase orders, read on. We’re going to fill you in on the benefits of purchase order tracking as well as how to implement it.
(8 out of 10 managers agree – not drowning is an effective business strategy.)
Why Purchase Orders Are Important
Before we get into how to track purchase orders, let’s take a look at why purchase orders are important.
Many small businesses do not need to use purchase order forms, as their operations are simple and there are very few employees. However, as businesses start to scale, having a system in place to control and keep track of purchase orders is very important.
Purchase orders act as legal agreements between you as the buyer, and your supplier. They bind you to the order you are requesting, and protect you against sudden price increases and general procurement disagreements.
Internally, purchase orders also protect you from duplicated orders, unauthorized purchases, and order payment issues.
Thanks to these controls, purchase orders can save your company both money and time and can simplify the record-keeping process.
(Sanding your existing documentation is not recommended… but strangely satisfying to witness.)
If you want to know more about why purchase orders are important for small businesses, read this post.
How Purchase Order Tracking Used to Be Done
Although purchase orders can simplify record keeping and procurement, they can also become complicated. Traditionally, purchase orders were all paper-based.
Two copies had to be created. One was sent to the supplier, usually via mail while another copy was kept on record internally. With all of these purchase order copies floating around, it was easy for businesses to get bogged down in PO record keeping.
Fortunately, there are new and improved ways to carry out purchase order tracking which involve much less work and which are relatively instant. Let’s take a look.
How to Electronically Implement Purchase Order Tracking
There are a few ways you can track purchase orders electronically. These include Microsoft Excel-based systems, as well as dedicated applications for procurement and inventory management.
1. Using Excel for Purchase Order Tracking
One of the most basic ways to set up a purchase order tracking system is through the use of Excel. You can buy or download purchase procurement tracking Excel templates for purchase order tracking.
The pros of using Excel for purchase order tracking are that you can be relatively sure there are few-to-no calculation errors in your purchase orders and that the documents will not get lost. Excel generated POs are sent via email, which can be tracked and retrieved. Excel generated POs are also stored digitally, which is more practical than housing them in filing cabinets, as was the case with paper-based POs.
Simultaneously, there are also a number of downsides to using Excel for purchase orders.
Firstly, Excel POs can be easily emailed to the wrong person. They could even be accidentally sent to someone outside the company. They are also relatively easy to tamper with, and there is no way of verifying if tampering occurred. POs in Excel form also need to be printed out for approval signatures.
Excel PO systems also lack the automation and organization that dedicated applications have.
Despite these issues, many businesses still use Excel. However, studies are showing that its use is decreasing.
Thanks to the downsides of Excel for purchase orders, and to its slow decline in business use, you might want to opt for one of the following two electronic purchase order systems.
2. Procurement Systems
Procurement systems are capability rich applications that not only generate purchase orders and track them but also integrate with other systems (such as supplier systems) and handle the full gauntlet of procurement administration tasks.
For most businesses, this is the best way to track purchase orders.
The overarching benefit of procurement systems is that they automate a large portion of the PO tracking process and streamline the workflows around POs.
Cloud-based systems also allow for real-time purchase order tracking, from any location and any device. Employees can look up purchase orders and instantly see at what stage they are.
As purchase orders are automatically linked with corresponding invoices, this also eliminates the danger of mixing up which payments to make on which purchase orders.
3. Inventory Management Systems
Inventory management systems are very similar to procurement systems. They are in essence paired down versions of procurement systems. Procurement systems will generally include inventory management, but not the other way around.
If you do not need a full-scale procurement system, you can use an inventory system to track both your inventory and your purchase orders.
Cloud-based inventory management applications boast the same advantages of automation, security, and real-time tracking that procurement systems do.
Which Is the Best Solution for You?
There are numerous procurement and inventory solutions available. To pick the right one for your business, you will have to match your needs against the capabilities of potential solutions.
If your business has only recently reached the stage that it needs purchase order tracking, one of the best bets is to go with a solution that is intuitive to use and that supports numerous integrations.
Are You Ready to Start Implementing Purchase Order Tracking?
Purchase order tracking is essential to implement if your business is growing and reaching the stage where purchase orders are beginning to get complicated.
If your business has reached this point, we encourage you to take a look at our configurable purchasing software solution. At merely $10 a month, your business can have access to a bevy of tools and systems that will not only track your purchase orders—but allow you to carry out all your business’s procurement processes from one platform.
If you are hesitant to pay for a service that you haven’t tried (or your needs are minimal) you can also take advantage of our free basic offering.
Want Tradogram news direct to your inbox? Sign up now.