In today’s fast-paced and competitive business world, effective purchase order tracking has become essential for businesses of all sizes. By implementing a reliable tracking system, companies can streamline their purchasing processes, improve efficiency, and enhance supplier relationships. This article will explore the importance of purchase order tracking, key features of tracking systems, steps to implement tracking in your business, and how to overcome common challenges in the process.
Understanding the Importance of Purchase Order Tracking
Purchase order tracking is a crucial aspect of managing procurement activities in any business. It involves closely monitoring and managing all stages of a purchase order, from creation to fulfillment. By keeping a record of purchase orders, tracking their status, ensuring timely delivery, and resolving any issues that may arise, businesses can maintain control over their purchasing activities and ensure compliance with procurement policies.
Defining Purchase Order Tracking
Purchase order tracking refers to the process of monitoring and managing all the stages of a purchase order, from creation to fulfillment. It involves keeping a record of purchase orders, tracking their status, ensuring timely delivery, and resolving any issues that may arise during the procurement process. An effective tracking system helps businesses maintain control over their purchasing activities and ensures compliance with procurement policies.
When a purchase order is created, it is assigned a unique identification number, which serves as a reference throughout the tracking process. This identification number allows businesses to easily locate and track the progress of each purchase order.
Throughout the procurement process, purchase order tracking involves various activities, such as:
- Monitoring the status of purchase orders, including whether they have been approved, sent to suppliers, or received
- Tracking the delivery of goods or services, ensuring that they are received on time and in the expected condition
- Resolving any issues or discrepancies that may arise, such as incorrect quantities, damaged goods, or late deliveries
- Maintaining a comprehensive record of all purchase orders, including details such as the items ordered, quantities, prices, and delivery dates
Unveiling Purchase Order Tracking
At the core of any procurement department is an efficient PO log. This log facilitates the tracking of purchase orders, making it an invaluable tool for modern businesses. A purchase order is a legally binding document that guides the procurement team throughout the procurement process.
Purchase order tracking refers to the process of following a purchase order from the initiation of the purchase process until the final payments are made. In essence, it monitors the purchase order throughout its entire lifecycle, providing complete visibility over the supply chain. The main goal is to fully disclose all related procurement procedures, making it a crucial step in the procurement process.
Purchase orders for the same products may be tracked at different times, depending on the products in question. This covering helps both the buyer and the seller in case of any issues related to the transaction. Traditional methods of tracking purchase orders manually can lead to a lot of paperwork and misunderstandings. Modern purchase order tracking, however, streamlined by tools like Genio.ac, enhances business productivity to levels unheard of a few decades ago.
Understanding the Purchase Order Lifecycle
Purchase Requisition
The purchase order lifecycle begins when an employee from the buyer’s company drafts a request for required goods or services. This request is then forwarded to internal team members for scrutiny, approval, or rejection. Any changes in the list of goods and services, budget, timeline, etc., are noted at this stage.
Purchase Approval
The necessary approvers review and sign off on the purchase request. The approval can be performed by a single approver or a group of people, depending on the organization’s policies. It often depends on the amount of money involved. Occasionally, the request might be managed through strategic sourcing to ensure the best pricing if a preferred supplier does not exist.
Purchase Order Issued
Once the purchase order is created and accepted, the buyer issues a PO to the supplier, assigning a specific PO number. It includes all essential information, such as the estimated cost and the total number of units.
Supplier Acceptance
Upon receiving the purchase order (PO) from the buyer, the supplier either accepts, rejects, or returns it for further discussion. Upon approval, the supplier will deliver the products and services and then send a bill for payment.
Purchase Order Recorded
Once the supplier signs the PO, the buyer can legally record it and keep it on file.
Implementing Purchase Order Tracking with Genio
The traditional purchase order process can be time-consuming and complex. However, with automated technological solutions like Genio.ac for purchase order tracking, businesses can effortlessly manage every aspect of purchasing and payment.
These purchase order tracking systems boost accuracy and uniformity throughout the entire PO process, reducing the amount of manual accounting and paperwork required. With efficient cloud software like Genio, businesses no longer have to worry about losing purchase orders or paying invoices with incorrect POs.
Businesses no longer need to sift through cluttered spreadsheets and email boxes to obtain information about purchase orders. With just a single click, customers can easily find the order date, vendor information, and even the initial purchase requests.
The Importance of Tracking Purchase Orders
Confirm the Status of the PO
There are instances where suppliers fail to fulfill the order. Although rare, it does happen. This could result in a shortage of critical equipment, delaying the launch of the new project, and causing more revenue loss than anticipated. To verify the receipt, acceptance, and confirmation of purchase orders, an automated purchase order tracking system like Genio.ac must be employed. If the issue is detected in time, it can be resolved by placing a new order before the deadline is missed.
Know the Status of your Order
Purchase order tracking keeps you updated on the status of your orders as they are filled, shipped, and delivered. Failure to receive orders can result in severe delays in inventory management. Purchase order tracking informs you whether your order has been dispatched, is in transit, or is on its way to your receiving department.
Keep Track of Multiple Delivery Dates
If you frequently place orders from multiple vendors and receive multiple shipments, you need to keep track of multiple delivery dates. Without a dedicated, adequately staffed department for inventory management, this could significantly disrupt your regular workflow. A purchase order tracking system like Genio.ac can notify you and your purchasing department when to expect the scheduled delivery, facilitating more efficient automated workflows.
Reassurance on Delivery Dates and Order Deadline
Unexpected delivery delays can force you to postpone launching your business, cancel appointments, or even turn away customers. Delivery dates can be affected by lead times and shipping options, depending on the type of merchandise. Multiple shipments from different manufacturers only complicate the issue. Information from a purchase order tracking system like Genio.ac allows you to anticipate delivery schedules, giving you the confidence to kick-start your new project on time.
Simplify Purchase Order Reporting
Managing multiple delivery deadlines, procurement orders, and various sites can easily lead to overwhelm. Things can easily fall through the cracks in such scenarios. With an efficient purchase order tracking system like Genio.ac, you won’t need to keep track of multiple receipts or shipment confirmations. The system can generate a weekly report detailing all your shipping activities, making it easier for your sales team to manage their tasks.
Purchase Order Approval Workflow with Genio
The purchase order approval process can be simplified and streamlined with the use of Genio. Here’s a breakdown of how a purchase order gets approved using Genio.ac, regardless of the method used in your organization:
Request Generation
The purchase order process is triggered when the procurement department or designated employee makes a specific request for products or services. The employee then drafts a purchase order, detailing the items required, the preferred vendor, their price, the date they are required, and the delivery address.
Approval Process
The purchase request is then sent to the relevant PO approvals representative by the initiating employee. This could be the management of the employee or a higher-ranking official. If the request is approved, the process moves to the next stage.
Purchase Order Issuing
To expedite the process, the approved purchase requisition is converted into a purchase order with a unique number and delivery details. The chosen vendor receives the purchase order, either physically or electronically.
Analyze Vendor Response
On receiving the purchase order from you, the vendor will provide a receipt and the necessary delivery details. An official purchase order from you that the vendor receives establishes a legally enforceable contract for the transaction to take place.
Goods Received
Your personnel must check the delivered goods against the packing slip to ensure that the received goods are not damaged, missing, or inconsistent with the planned purchase order. Any discrepancies should be reported immediately to the vendor to ensure that the goods are delivered in accordance with the purchase order.
Process the Invoice
The vendor sends an invoice to your accounts payable department when the final check is written. The purchasing department must perform a three-way match that includes records like the initial purchase order, the vendor’s invoice, and the receiving report or packing slip to manage control spend and ensure transactional data matches.
If everything is in order, the accounts payable department pays the vendor following the agreed-upon terms. If something seems off, further discussions with the vendor are necessary.
Pros and Cons of Traditional Purchase Order Tracking Methods
While traditional purchase order tracking methods have their benefits, they also come with several drawbacks. Let’s delve into some of these:
Pros:
Low or No Training Necessary
Very little or no training is required for staff to use tools like Microsoft Excel spreadsheets. With an excel purchase order tracking system, data can be retrieved quickly and easily.
Simple to Start
The use of Excel spreadsheets and other manual purchase order tracking methods is straightforward. For organizations dealing with a small volume of POs, data input and validation are simple tasks.
Cons:
Misplacement and Damage Incidents
A purchase order needs to be duplicated multiple times for manual processing. These copies could easily be lost or damaged while being handled by the staff. Managing multiple copies, attaching them to the appropriate set of papers, and filing them is time-consuming and prone to error.
Inaccuracy and Inconsistent Implementation
Traditional purchase order tracking involves manual processes for data entry, validation, and PO approval. Everyone has a different approach to work, leading to inconsistencies and inaccuracies in the PO data.
Low Compliance and Transparency
Traditional purchase order tracking methods do not have a standardized tracking system. Processes that are manually managed are prone to human bias and errors. As a result, manual purchase order tracking workflows show low compliance and suitability.
Limited Visibility
With manual purchase order tracking methods, the status of the purchase order is not readily visible. Due to a lack of visibility, procurement is unclear about what is causing delays and process bottlenecks. The points above indicate that a manual purchase tracking system has more disadvantages than advantages.
Finding the Best Purchase Order Tracking Solution for Your Business
The choice of the best purchase order tracking software largely depends on the staff of the business or organization in need of the software. For instance, in a company, the solution often only makes up a small part of a larger one, such as the accounting division.
Genio.ac is one such powerful purchase order tracking tool that relieves businesses from worrying about misplacing purchase orders or paying invoices with incorrect POs. Here’s how Genio.ac can help streamline your purchase order tracking process:
Quick PO Creation
An efficient software like Genio.ac creates POs by gathering data from related purchase requisitions and required business requirements. The details of the order are automatically updated and charted in the purchase order templates.
Automated 3-Way Matching
An automated purchase order tracking software like Genio reduces errors by performing a three-way match of the purchase requisition, purchase order, and the invoice of a specific project.
Real-Time Updates
Cloud software like Genio.ac updates all the modifications made on the orders and constantly updates a single dashboard, enabling purchasing department members to look at the reports in real-time.
Effective PO Creation
Manual purchase order processes can consume a significant amount of time, money, and paperwork. However, a digital solution like Genio.ac is far superior as it provides efficiency and precise uniformity, eliminating the need for paper-based operations, reducing operational expenses across the procure-to-pay cycle, eliminating manual labor and human error, and ensuring transparency. Moreover, it improves the accuracy and speed of purchase order execution.
Transform how you create and manage purchase orders for your business with Genio.ac.
Wrapping Up
Purchase order tracking is crucial for growing businesses that need to keep track of numerous purchase orders. Often, procurement experts spend their productive work hours on low-value tasks like data validation and approvals. But with automated purchase order tracking software and processing, these hours can be freed up for other important endeavors.
Genio.ac is a proven tool that can significantly speed up the processing of purchase orders, thanks to its integrated automation platform and exceptional key features. With its intuitive interface, you can track purchase orders without having to switch between multiple apps, even on mobile devices.
Frequently Asked Questions
- What is a PO number?
A PO number is a unique identifier attached to each created purchase order to keep track of the purchase order during its lifecycle.
- What are the four main steps of a purchase order creation?
The four main steps of a purchase order creation include:
- Creation and approval
- Dispatch and goods delivery
- Three-way match
- Payment and closure
- What is the difference between an invoice number and a purchase order number?
An invoice number is assigned by the seller when an invoice is sent, and a purchase order number is assigned by the buyer when a PO is created.
- Who creates a purchase order?
A purchase order is created by an authorized employee or accounts department in the buyer’s company.
