Top 7 strategies to streamline PO management

Companies rely on purchase orders (POs) to secure goods and services. This helps them prioritize efficiency, accuracy, and cost control. However, PO handling is prone to errors, delays, and unnecessary costs if done manually. 

With a suitable PO automation system for managing POs, companies can keep track of their spending and projects. Proper management can also result in fewer mistakes and delays, better quality products, and better control over spending.

According to the latest research, PO automation leads to a 65-80% increase in processing speeds, transforming orders from slow processes to near-instant transactions.

In this blog post, we explore how an ineffective PO process affects your bottom line. 

What is PO automation?

PO automation is a way to handle purchase orders (the official documents businesses send to suppliers when they want to buy things) using software instead of doing it manually with a paper pen or email. 

Also, the 2023 Benchmarking Report on Automation Trends from the Institute of Finance & Management (IOFM) indicates that many companies are now leveraging automation to improve things like PO management. 

Now, let’s take a look at how PO automation is generally executed: 

Purchasing made digital

Imagine shopping online; instead of writing down what you want, sending a letter to the store, and waiting for a reply, you pick what you want, click a button, and it's all set. PO automation does something similar for businesses.

Streamlined ordering

When a company needs to buy supplies or services, it uses automation software to create a purchase order. This digital document lists what the company wants to buy, how much of it, and at what price. Then, it automatically sends the purchase order to the supplier, which is much faster and more accurate than sending it manually.

Faster approval & payment

The software verifies delivery against the order, enabling automatic approval if correct. This speeds up supplier payments, reduces errors, and streamlines the entire process.

How does an ineffective PO process affect your bottom line?

Worryingly, 67% of supply chain managers still use Excel to manage aspects of their supply chain. Such an inadequate PO process can hurt your company's bottom line in several ways. Here's how:

• Increased errors: Mistakes such as over-ordering or under-ordering become more common, leading to financial waste or shortages that disrupt operations.
• Wasted time: Employees spend too much time handling paperwork or correcting issues, diverting attention from more productive tasks.
• Project delays: Incorrect or late orders can postpone projects, upset customers, and potentially increase costs to expedite completion.
• Overspending: A lack of a tracking system for purchases and spending can result in going over budget. This might happen because more inventory visibility is needed to secure the best prices or because unnecessary items are bought.
• Strained supplier relationships: Suppliers prefer reliable partners. A chaotic PO process can cause frustrations like late payments or order inaccuracies, potentially harming future negotiations or deals.
• Legal and compliance risks: Disorganization in the PO process can lead to regulatory non-compliance or legal issues, entailing hefty fines and reputational damage.
• Loss of trust: Frequent errors and inefficiencies can erode trust among employees, customers, and partners, leading to lost sales and damaged relationships.

Challenges with manual PO process and how PO automation solves it

Key challenges with manual PO processes include: 

• Time-consuming: Manual creation, distribution, and verification of POs is a tedious and inefficient process.
• Error-prone: Mistakes like incorrect quantities, duplicate orders, or mismatched data are common.
• Lack of visibility: Tracking PO status and reconciling orders with deliveries is difficult, especially with misplaced documents.
• Approval bottlenecks: Delays occur when approvers are unavailable, hindering timely order fulfillment.
• Poor recordkeeping: Locating past orders becomes a time-consuming and frustrating exercise.

How PO automation benefits

This shift to PO Automation cuts through the chaos into a streamlined, almost effortless routine. Let’s see how: 

• Streamlines processes: Automation eliminates repetitive tasks and reduces manual intervention.
• Minimizes errors: Built-in checks and validations ensure data accuracy across the PO lifecycle.
• Enhances visibility: Real-time tracking provides a clear overview of order status and progress.
• Accelerates approvals: Automated routing and notifications expedite the approval process.
• Centralized recordkeeping: All PO data is easily accessible in a digital repository.

7 strategies for PO automation

Now, let’s go over some expert-recommended strategies that can help you with PO automation:

1. Unify your procurement data

Setting up a centralized system for managing procurement data ensures accuracy and protection. For instance, you are storing all your receipts, invoices, and order forms in a locked filing cabinet. 

Strong security measures like encryption protect this information from unauthorized access or breaches. With tools like predictive analytics, you can analyze past purchasing patterns to forecast future needs. 

This strategy helps derive insights specific to usage, such as user adoption rates, feature utilization, and cost optimization.

2. Implement electronic purchase orders

Transitioning to electronic purchase orders (e-POs) for product subscriptions requires seamless integration with existing systems, particularly those managing financials and user access. 

Application programming interfaces (APIs) and electronic data interchange (EDI) standards facilitate the real-time exchange of subscription data with SaaS vendors. Digital signatures and blockchain solutions further improve security and provide auditability for subscription transactions. 

Automation technologies streamline contract execution, billing, and license management processes, optimizing SaaS procurement efficiency and cost-effectiveness.

3. Automate approval workflows

Automating approval workflows for SaaS procurement involves configuring rule-based algorithms to route subscription requests through predefined authorization hierarchies. 

Business process management (BPM) software and workflow automation tools streamline approval processes, reducing manual intervention and ensuring compliance with subscription policies. 

Moreover, AI and NLP algorithms improve automation by extracting relevant information from subscription agreements and invoices. This AI-driven automation increases accuracy, expedites processing, and enhances budget control for SaaS acquisitions. 

For instance, the SaaS procurement and renewal platform Spendflo offers Flo AI, which allows you to streamline your entire SaaS procurement process on the move right from communication tools like Slack.

4. Add-in analytics 

Harnessing advanced analytics and business intelligence (BI) tools enables organizations to unlock actionable insights from procurement data. Multidimensional data modeling and OLAP (Online Analytical Processing) techniques facilitate interactive analysis and ad-hoc reporting. This empowers stakeholders to explore data from multiple perspectives. 

Also, implementing data visualization tools, such as dashboards and interactive charts, enhances data interpretation and communication of key performance indicators (KPIs). 

Additionally, leveraging prescriptive analytics enables organizations to optimize procurement strategies, mitigate risks, and maximize value creation. 

By embracing data-driven decision-making, organizations can enhance operational efficiency, improve resource allocation, and drive continuous improvement across the procurement lifecycle.

5. Integrate with inventory management

Integrating with inventory management focuses on tracking and optimizing software licenses and subscriptions. Application integration frameworks facilitate seamless data exchange between procurement systems and license management platforms. 

Also, integration with inventory management tools achieves real-time visibility into subscription usage and license allocations. 

Automated license provisioning and de-provisioning processes enhance resource allocation and cost management for SaaS products.

6. Go for cloud-based solutions

Embracing cloud-based PO management solutions like Spendflo offers scalability, agility, and cost-efficiency for organizations of all sizes. 

• Leveraging cloud-native architectures and serverless computing frameworks ensures elastic scalability and high availability, accommodating fluctuating demand and workload spikes. 
• Implementing containerization technologies like Docker and Kubernetes enables seamless deployment and orchestration of microservices-based procurement applications. 
• Using AI and ML services further helps organizations build predictive analytics models and automate decision-making processes. 

By using cloud computing's power, organizations can accelerate innovation, reduce time to market, and drive competitive advantage.

7. Consistent training 

Prioritize ongoing training and support to maximize user adoption of your automated procurement system. 

• Role-based training programs and e-learning modules empower users, driving knowledge retention and engagement.
• Establishing a dedicated support desk and knowledge base facilitates the timely resolution of technical issues and user queries. 
• Leveraging remote support technologies, such as screen sharing and virtual assistants, enables efficient troubleshooting and remote assistance. 

By investing in user training and support, organizations can maximize the ROI of procurement automation initiatives and build a continuous learning and improvement culture.

Benefits of PO automation

Below are some key benefits that underscore the value of PO automation:

Growth without added complexity

The scalable infrastructure supports business growth without the proportional increase in administrative workload or complexity, allowing organizations to manage higher volumes of transactions seamlessly.

Work from anywhere, access anytime

Cloud-based deployment offers flexibility and accessibility. It enables procurement teams and relevant stakeholders to access the system from anywhere and facilitates remote work and global operations.

Data security for peace of mind

Improved security features, including role-based access control and encryption, protect sensitive procurement data and ensure only authorized personnel can access or modify purchase order information.

Smarter inventory, optimized operations 

Machine learning algorithms can predict future procurement needs based on historical data, improving inventory management by suggesting optimal reorder points and quantities to prevent stockouts or overstock situations.

Seamless connectivity, better data flow: 

API integrations allow seamless connectivity with other business systems (e.g., CRM, supply chain management software), enabling a unified approach to managing business operations and enhancing data interoperability across platforms.

Top 5 tools for PO automation

Here are the five top cloud-based PO automation software options and their main advantages so you can choose the one that best suits your needs.

1. Xero

Xero is flexible online accounting software that connects businesses with their banks, accounting tools, accountants, payment services, and other apps. The software is known for its innovative features and user-friendly experience. Catering to small and medium-sized businesses, Xero offers real-time financial insights and streamlined accounting processes, facilitating better financial decision-making.

Features:

• Real-time financial reporting and analysis
• Automated bank feeds and reconciliation
• Online invoicing and bill payments
• Comprehensive payroll and HR integration
• Strong security measures and continuous updates

Pros:

• Provides a clear and detailed view of financial health
• Easy integration with over 800 third-party applications
• Constant innovation and feature updates

Cons:

• Limited customization options for reports and invoices
• For specific functionalities, users must rely on third-party add-ons
• May have restrictions on customizing reports and invoices to specific business needs

For pricing, contact the Xero support team.

2. Pipefy

Pipefy allows business teams to adapt and manage their workflows with an easy-to-use interface quickly. IT teams gain more control and oversight, making it easier to handle security and compliance. This reduces the need for unofficial IT solutions. Purchasing teams can easily set up and automate their processes, making everything more efficient and transparent.

Features:

• Customizable workflow templates
• Process automation and optimization
• Integration with major ERP and CRM systems
• Forms and e-signatures offer safe external stakeholder interactions
• Advanced reporting and analytics capabilities
• Built-in reports help track progress and find delays
• User-friendly interface with drag-and-drop functionality

Pros:

• Break down data barriers and automate tasks and workflows for a smooth purchasing process
• Promotes transparency and accountability through clear process tracking
• Enhances efficiency by reducing manual tasks and errors

Cons:

• May require a learning curve to leverage its customization capabilities fully
• Mobile versions might not offer the full functionality available on the desktop platform, impacting on-the-go productivity
• Higher pricing compared to basic task management tools

For pricing, contact the Pipefy support team.

3. Procurify

Procurify is online software for buying and managing expenses, helping businesses oversee and keep track of their spending. This solution lets users control, track, and manage their purchasing process. 

Features:

• Purchase order management and tracking
• In-platform communication, audit tracking, and reporting
• Real-time budgeting and spend analytics
• Vendor management and procurement workflow automation
• Customizable approval routing 
• Integration with accounting and ERP systems

Pros:

• Enhances spend visibility and control across the organization
• Streamlines procurement processes, reducing manual workload
• Supports a proactive approach to budget management and compliance

Cons:

• Primarily suited for mid-sized to larger organizations, possibly over-complex for small businesses
• Onboarding to fit specific organizational workflows can be time-consuming.
• Some users may find the reporting tools less intuitive or lacking in-depth

For pricing, contact the Procurify support team.

4. Kissflow

Kissflow Procurement Cloud is a user-friendly platform that lets users create custom apps and make their processes digital with little to no coding. It offers a robust platform for creating, modifying, and analyzing business processes, enhancing productivity and operational efficiency.

Features:

• Process design with no-code workflow creation
• Automated forms, project and case boards, collaboration tools, analytics, and integrations.
• Task automation and performance monitoring
• Custom report generation for data-driven insights
• Integration with various third-party applications
• Mobile accessibility for on-the-go management

Pros:

• Intuitive design and easy-to-use interface
• Offers scalability to accommodate growing business needs
• Facilitates cross-functional collaboration and communication

Cons:

• Limited customization in the standard plans
• Integration complexities with some external systems
• May require a learning curve to familiarize with its interface and capabilities

For pricing, contact the Kissflow support team.

5. Quickbooks

QuickBooks is a leader in accounting software, offering a comprehensive financial management tool suite for small to medium-sized businesses. It simplifies accounting tasks with its intuitive design and robust feature set, ensuring efficient financial tracking and management.

Features:

• Invoicing and accounts receivable/payable management
• Payroll processing and financial reporting
• Tax preparation and filing assistance
• Budgeting and forecasting tools
• Cloud-based access and mobile app support

Pros:

• User-friendly interface with extensive support resources
• Integrates seamlessly with a multitude of business services and apps
• Consistent improvements and updates based on user feedback

Cons:

• Can be costly for businesses requiring advanced features
• Lacks multi-currency or international tax capabilities
• Some users report challenges with customer support responsiveness

For pricing, contact the Quickbooks support team.

Streamline PO automation for a smarter financial strategy with Spendflo

An inadequately managed purchase order process can significantly impact an organization's financial performance. Therefore, it's vital to oversee your PO process effectively.

Adopting a cloud-based digital solution for your purchase orders automates every step, drastically reducing the risk of errors such as lost purchase orders or incorrect data entries, typically leading to operational delays.

By leveraging a comprehensive procurement platform like Spendflo, you can significantly decrease the time and expense of processing purchase orders. Spendflo stands out with its cloud-based platform, offering features such as:

• Streamlined approval workflows
• Real-time budget tracking
• Seamless integration with existing financial systems

These capabilities ensure ease of setup and use and enhanced control and visibility over your procurement process.

Move away from outdated manual methods and consider Spendflo for a more effective and efficient solution. 

‍Get a free saving analysis with us to experience the benefits of automated purchase orders firsthand!