A purchase order system comes with various modules and features to improve your procurement process. It improves inventory management and production workflow by having the right amounts of raw materials at the right time. In this blog post, we will understand the purpose, benefits, and features of a purchase order system. We will also help you on how to get the best PO system for your business.
What Is A Purchase Order System?
A Purchase Order System is a software solution for businesses to manage their purchasing activities. It can automatically create, approve, and send purchase orders to the suppliers. You can set certain guidelines in the system according to your inventory requirements to handle the procurement process.
If you set reorder points in the purchase order system, it helps you prevent inventory shrinkage and production delays. You can also integrate the software with other tools, like inventory management and production planning software, to improve workflow. The purchase order management system also keeps records of your suppliers and transactions.
What Is The Purpose Of A Purchase Order Management System?
The purpose of a purchase order management system is to optimize the procurement process according to the business’s specific requirements. Automating and digitising the procurement of goods is another important purpose of purchase orders.
The purchase order management software is also focused on increasing visibility over financial transactions to manage expenses. You can also expect PO systems to improve communication with your team and suppliers.
What Features Should You Look For In Purchase Order System?
A purchase order system helps you speed up your purchasing activities with some important features. Here are the purchase order system features that you should look for:
1. Create Purchase Requests
A PO system creates purchase requests accurately and quickly. You can set reorder points in the PO systems to automatically create purchase orders when the stock reaches your specified limits. It includes all the details in the purchase requests, like product lists, quantities, prices, vendor information, and shipping addresses.
2. Approve Purchase Requests
You can set certain guidelines in the purchase order system to approve your purchase requests automatically. The PO system can also send the purchase requests to the management for approval. You can make your own rules for the approval of purchase requests.
3. Keep Suppliers’ Details
A purchase order management system keeps all your suppliers' details and sends them your purchase orders automatically. The system can provide a list of main and alternative suppliers who can fulfil your inventory requirements. You can pick your preferred suppliers and make orders based on that.
4. Track Purchase Order
A purchase order system tracks the status of your purchase orders once they are created and sent to suppliers. It improves the visibility of your procurement process. With this information, you can make quick decisions, set production targets and fulfil orders.
5. Monitor Purchasing Expenses
A PO system improves your finances as well since it monitors your purchasing expenses. It helps you analyze whether you are spending money on the right products or not. You can set a budget limit in the system to get alerts when your expenses reach or cross that limit.
6. Additional Integration
You can integrate the purchase order system with other tools in your business to improve workflow. If you integrate your PO system with inventory management software, accounting or production planning software, you can improve your business’s efficiency.
7. Mobile Accessibility
The purchase order management system provides you with the flexibility to manage your purchasing activities from anywhere. You can access real-time data from your smartphone to track the status of your purchase orders. You can also track your supplier’s comments and activities about purchase orders.
8. Track Transactions
You can track your financial transactions with your suppliers with the help of a purchase order system. It helps you avoid errors and misunderstandings. It also helps you identify purchase orders whose payments are still pending. It allows you to analyze your purchasing targets and expenses.
9. Monitor Stock Levels
PO software can monitor your stock availability to avoid overstocking and out-of-stock situations. When certain products in your inventory reach the minimum stock level, the PO system can reorder them to avoid disruption in your production process.
10. Easy To Operate
You don’t need to hire additional employees to operate a purchase order system because it comes with an easy-to-operate feature. You may have to give training to your existing employees to operate the system with accuracy. It allows access to multiple users to manage your purchasing activities.
What Are The Benefits Of Purchase Order System?
You can improve your purchasing efficiency and overall workflow with a PO system. Here are the key benefits of purchase order system for your business.
1. Streamline Procurement Process: A PO system manages various tasks automatically. You can set reorder points and budget limits in the system to manage stock levels and use your money wisely.
2. Improve Supplier Relationships: PO system contains all the details of your suppliers, and you can send them purchase orders via WhatsApp or email. This makes communication easy and quick.
3. Control Over Budget: A PO system controls your budget when buying different types of products. If you set budget limits in the system, it will alert you when reaching your specified limits. It also provides real-time visibility over your purchase orders and invoices.
4. Support Overall Workflow: A PO system supports and improves your business’ overall workflow. It is mainly focused on purchasing the required products. When you have the right amount of raw materials, you can manufacture products to fulfil rush orders.
5. Insights And Reports: A PO system can provide insights and reports according to your previous purchasing activities. It can help you identify suppliers who are beneficial for purchasing products. It can also help you make strategies to save money.
How To Get Started With Purchase Order Software?
You can implement and start using purchase order software in simple steps. Here are the factors you should consider to get started with purchase order software.
- Understand your procurement needs to fulfil your production targets and business goals.
- Understand the features of a purchase order system.
- Identify the features that are needed to fulfil your specific requirements.
- Analyze the customizable options in the PO software.
- Find out the costs of implementation and maintenance of the PO software.
- Get the purchase order software from a reliable service provider.
- Give training to your employees on how to operate the purchase order software accurately.
- Monitor your performance and improve your purchasing activities at regular intervals.
Improve Your Procurement Process With TranZact
Procurement, purchase orders and material requirement planning are some of the most important tasks for a manufacturing business. They are the initial stages that influence the rest of the production process. Businesses are more and more relying on software to deal with them. TranZact is becoming the first choice of SME manufacturers in India to improve their procurement process.
TranZact is the easiest software made for Indian Manufacturers. It offers you customizable options and specific features that can fulfil your unique requirements. It keeps a record of your suppliers, purchase orders, and invoices that can help you make informed decisions. It has the functionality to directly send the orders through email and WhatsApp. TranZact is also easy to operate and can be implemented in your business without influencing your operations. Choose TranZact now over any full-feature ERP to improve your purchasing activities and workflow with affordability.
FAQs
1. What is purchase order management system?
A purchase order management system is a part of businesses that focuses on the procurement of goods according to stock availability and specified targets.
2. What are the 4 types of purchase orders?
The four types of purchase orders are as follows:
- Standard Purchase Orders
- Planned Purchase Orders
- Blanket Purchase Orders
- Contract Purchase Orders
3. How does the PO system work?
The purchase order (PO) system generates purchase requests for goods, sends them to the vendor after approval, and tracks the status of the whole procurement process.
4. What are the features of a purchase order?
The features of a purchase order are as follows:
- Purchase Request Creation
- Purchase Request Approval
- Purchase Order Status Tracking
- Suppliers Management
- Stock Levels Monitoring
- Mobile Device Accessibility
5. What software is used to purchase orders?
Purchase order software is a specific solution for creating purchase orders automatically, or you can also use other accounting software that includes purchase modules.
6. How do I create a purchase order in Excel?
You can create purchase orders in Excel by using a new spreadsheet or an existing template that includes product lists, quantities, prices, vendor information, and shipping addresses. Fill in all the details and get approval from relevant authorities before sending it to the vendors.
7. What are the benefits of a PO system?
The benefits of a PO system are as follows:
- It improves the purchasing activities.
- It prevents inventory shrinkage.
- It provides transaction records.
- It supports inventory and production workflow.
- It improves relationships with suppliers.
8. What are the advantages of a standard purchase order?
A standard purchase order helps you comply with the rules and regulations related to the purchasing of various products set in your industry or by the government. It provides records of previous transactions and improves visibility over procurement processes.
