Purchase Order Automation: A Step-by-Step Guide for SMEs

Jun 2, 2022 in Purchase and Production

5 MIN READ

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The efficiency and effectiveness of your purchase order procedure are closely related to its success. However, without the advantages of automation, you won't be able to attain maximum efficiency. You must invest in purchase order automation if you want to scale your procurement process.

Purchase order process automation assists in addressing the manual processing difficulties. Purchase order automation can make your purchasing procedures faster and more efficient.

So, how do you automate the purchasing process?

Let's discuss the whole purchase order automation process in detail below.

What Is Purchase Order Automation?

Purchase Order Automation is the process of enforcing and automating a purchase order approval process through the use of an automation platform.

Instead of using paper-based purchase orders and manually asking for approval, you may utilize centralized software to send a purchase request to the relevant team member for assessment and approval.

Purchase order process

Once accepted, the PO would be created automatically within automation software such as TranZact, removing the need for data entry. This eliminates several manual steps from the process. For one thing, you won't have to fill out, email, print, or file purchase orders manually. Another advantage is that you won't have to ask management to manually authorize each PO.

Your entire purchase order process takes place in a digital environment with low friction when you use PO automation.

Read more - 4 Facts & Challenges SMEs should know about Purchase Order

Why Should Your Purchase Order Process Be Automated?

To put it simply, manual purchase orders are inefficient.

They are not only intrinsically slow because paperwork is filled out by hand, but delays in approvals can also hamper the entire system.

Furthermore, manual purchase order processing is prone to errors. These following challenges are frequently what drive automation in a business.

  1. Inefficiency in the process
  2. Paper heavy
  3. There is no accountability or transparency in the process.
  4. Security threats
  5. There are no process regulations or controls.
  6. Time-consuming.

You may select which employees can submit POs and pre-approve their budgets using a purchase order automation platform. You can also add vendors to your whitelist. Once your guardrails are in place, your team can simply use the platform to submit a PO.

The system will automatically authorize the PO as long as it falls within the parameters. If it does not, the system marks it as an exception. An alert is sent to management. They will also need to manually evaluate the PO before it can be approved.

This approach holds everyone accountable while removing the need for manual actions at each level of the process.

What are the Advantages of Purchase Order Automation?

Implementing an automation solution will provide you and your team with many benefits if you are dealing with a lot of paper, email, old systems, and a lack of security while processing Purchase Orders. Organizations of all sizes, whether small or large, can benefit from automation and spend less time on low-value operations.

While the benefits of automating the Purchase Order Process vary by company, the following are the most prevalent advantages that firms enjoy:

1. Enhancement of Process Efficiency.

You can reduce processing times and boost process efficiency by using an automated procurement procedure. Automation provides your team with full visibility and confidence by streamlining dull and repetitive operations and ensuring that the process is performed according to the rules and controls placed in place. Automation enables your staff to transition to real-time processing. 

There is no longer a lag between PO approval and information delivery to the vendor. This saves a large amount of time, and the comprehensive audit trail eliminates the need to seek down missing orders or documentation.

Read more - What is Approval Management - Ultimate Guide for SMEs

2. Save Time & Money.

Save time

When an organization processes in a manual environment, it incurs numerous costs, both expected and unexpected. While businesses budget for paper, ink, time spent processing POs, and overhead, they frequently overlook the expenses of undocumented activities and tasks. For instance, time spent looking for missing documents, chasing down approvals, processing orders twice, and so on.

3. Reduce Error.

Let's face it: as humans, we make mistakes all the time. While the majority of them are insignificant, there are some instances where these errors can cost businesses thousands, if not hundreds of thousands, of rupees. An automation system, such as TranZact, eliminates the need for human data entry and enables your team to implement checks and balances to avoid mistakes.

4. More Visibility.

Since when have you asked yourself, "Who has that document?" or "Has this been approved yet?" When manually processing purchase orders, these are common questions. There is no way to tell where things are in the process, who has the PO, or if it has been approved. Too much time is wasted pursuing approvals, tracking down orders, and determining where things are.

Your team will no longer waste time searching for information or tracking the status of POs if you use an automation platform like TranZact. PO automation streamlines your data and integrates your systems, providing you with real-time reporting and comprehensive transparency.

Read more - Automated Reporting - Ultimate Guide For SME Businesses.

Way Forward.

Overall, purchase order automation is a wonderful tool that can assist you in scaling your developing firm. The advantages are obvious. However, getting started is not always simple.

There is some risk whether you use a turnkey solution or a custom buy order automation system. For starters, any new system necessitates an investment. You'll also want to ensure that your investment will pay off in terms of time and resources saved. However, there are hazards associated with implementing new software. And expensive software is not necessarily the best solution for a small firm. TranZact is an excellent solution for assisting SMEs and manufacturing companies in not just automating purchase orders but also the complete business workflow. Businesses should always choose a solution that caters to all their needs and is compatible with their nature of work and industry.


TraZact

TranZact is a team of IIT & IIM graduates who have developed a GST compliant, cloud-based, inventory management software for SME manufacturers. It digitizes your entire business operations, right from customer inquiry to dispatch. This also streamlines your Inventory, Purchase, Sales & Quotation management processes in a hassle-free user-friendly manner. The software is free to signup and gets implemented within a week.