Purchase Order Management Software

What Is Purchase Order Management Software?

By Team TranZact | Published on Jun 30, 2024

Today many growing SMEs are adopting a purchase order management system to streamline their purchase workflow. There are several reasons for this.

During the daily operations of a business, the workforce engages in paper-based activities like accounting, invoicing, procurement, and purchase order management regularly. There's a high probability that these operational activities consume a vast amount of their time. This means they have little time to focus on value-adding tasks that require their expertise, like customer onboarding and product development.

7 out of 10 workers feel they're constantly performing the same tasks repeatedly. Due to these reasons, many companies today are looking for business process automation solutions like purchase order management systems to regain lost employee productivity.

TranZact - Best Inventory Management Software

This means you are behind your game if you haven't already decided to automate essential purchase workflows with the help of purchase order management software.

This blog includes all the details you need to know about a Purchase Order (PO), the inclusions of a purchase order management process, and the need and benefits of automating this process.

You will also understand how purchase order management software can help you and your team to accelerate operations and make more informed decisions when it comes to improving business productivity.

What Is a Purchase Order?

TranZact - what is Purchase Order

A purchase order is a legally binding document sent from the buyer to the seller to confirm their intent to purchase goods or services. This document typically lists important information about what the buyer wishes to buy, the item type and quantity, and details on delivery and payment terms.

An SME business needs supplies to operate. This can include raw materials to manufacture the final product, or semi-finished goods used for manufacturing final products. If a business does not manufacture these raw materials, then they purchase them from third-party vendors.

When a staff member raises such a purchase request, it is called a Purchase Requisition. Which then converts into a PO once the department head approves it.

Without advanced software for purchase order management, one will have to raise a purchase request and get it approved manually, followed by other processes, as we will see below.

A PO typically comprises the following details:

  • Type of requested goods.
  • Quantity of the goods.
  • Price of the goods.
  • Other details as the offeror may find necessary.

Generated by the buyer, this is an official document that becomes a contract once the vendor accepts it.

Purchase order management tools are important for any manufacturing process as they ensure that the purchasing team includes all these key details in all the POs without fail.

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What Is Purchase Order Management?

TranZact - what is Purchase Order Management

Purchase order management is a set of standard practices and processes that ensures complete and ready-to-access data of all the specific or multiple purchase orders created for the business.

As a business, it's important to have complete, up-to-date information on all the POs in your system. Especially if you are an SME business owner, streamlining your purchase order process is critical because procurement delays can be detrimental to your business' success.

Purchase order automation software plays a crucial role in this aspect.

What are the Different Types of Purchase Orders?

There are mainly four types of purchase orders:

1. Standard purchase order

Usually leveraged for one-time orders, it requires specific information since it is not a recurring engagement for most businesses.

2. Planned purchase order

This will have all the required information as standard purchase orders, except that the delivery date and location are unspecified. These are raised as needed by businesses.

3. Blanket purchase order

The details mentioned in this kind of PO remain the same as a planned purchase order, except it is for a future engagement and the number of products here remains unspecified.

4. Contract purchase order

This kind of PO will have the least information. Usually consists of terms and conditions as agreed by both parties.

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What Is the Purchase Order Process?

TranZact - what is Purchase Order process

A standard purchase order management process involves the following:

Step 1: Identifying the need

This process begins by identifying the need for goods or services within an organization.

Step 2: Creating a requisition

The second step is taken by a staff member who raises a purchase requisition on behalf of the company. A purchase requisition is created to formally request the procurement of the required items. The purchase order is reviewed and approved by authorized personnel within the organization.

Step 3: Creation of PO

When the management approves the purchase requisition, it becomes a purchase order (PO). A PO is generated, specifying the details of the order, including the item description, quantity, price, delivery date, and terms.

Step 4: Selecting a supplier

The appropriate supplier or vendors are identified and selected based on factors such as quality, price, and delivery terms.

Step 5: Dispatching the PO

The approved purchase order is sent to the selected supplier or vendor. Once a purchase order is created, the same has to be duly approved by the vendor. At this stage, the vendor can also ask for revisions, negotiate the order details, and approve it only once a mutual agreement is reached between the parties.

Step 6: Fulfilling the order

Once approved, the supplier processes the order, prepares the goods, and arranges for their delivery or shipment.

Step 7: Generation of a Good Received Note

Upon receipt of the goods, the buyer inspects and verifies the quality and quantity against the purchase order. A good received note (GRN) is generated by the purchasing company and sent to the vendor in acceptance of the consignment.

Step 8: Invoice processing and payment

The supplier sends an invoice for the delivered goods, and the buyer processes the payment based on the agreed payment terms.

Although the steps remain the same, with or without a purchase order management software, the efficiency and accuracy of the entire process improve if you choose to automate it with software, as the risk of human error is eliminated.

Impact of a Manual Purchase Order Management Process

TranZact - what is Purchase Order Impact

Companies raise POs very often, which means if the process is not enhanced with purchase order automation software, it can lead to:

    1. Lost purchase orders in stacks of paper-based documents.
    1. Consequential losses
    1. Lack of transparency
    1. Loss of employee productivity

This directly impacts the growth and revenue generation capabilities of your SME manufacturing business. Therefore, the importance of purchase order collaboration between all the internal departments of a business cannot be ignored.

Read Also - What Is Break-Even Analysis and How to Calculate It?

How Does Purchase Order Management Software Help?

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Automated software can bring multiple advantages to your entire purchase workflow. Onboarding to a platform like TranZact can help you simplify the complexities faced by your procurement team while offering an easy and intuitive tool to use.


Switch from legacy software to an advanced solution like TranZact, and you will notice a more streamlined purchase workflow within your organization.

This means you can monitor POs in real-time, and collaborate with your team members easily, saving you the worries of repeated follow-ups with reduced overlapping activities.


An automated solution will empower you to create POs in minutes and automate the approval process by eliminating additional steps involved in the process, like emailing drafts to management for approvals.

This allows spare time for your staff to perform strategic activities that require their expertise, contributing to overall organizational efficiency.

Advanced functionalities

Unlike legacy systems, with the features of purchase order management software, you can set up a workflow that results in consistent growth for your business. Some of these functionalities include audit trails, enhanced overviews, team collaboration, and more.

These benefits of purchase order collaboration enabled by purchase order processing software eliminate various gaps in this process and save precious business time.

What are the Core Functionalities of a Purchase Order Management Software?

TranZact - Help Purchase Order Impact

Automated purchase order management with software offers several benefits:

Easy creation of POs

You will have the tools to create digitized purchase orders and eliminate inefficiencies from a traditional paper-based system.

Automation of workflow

Not just creation, you can automate the entire process and get quicker approvals from department heads without sending multiple emails.

Better categorization

Category-specific tags and labels will ensure you assign the right team members the right job.

Easier collaboration

You can easily work and collaborate over a single platform. Share documents with your team members and tag them without switching to a different platform to communicate with teammates. This will ensure you don't lose crucial information in overlapping threads of communication.

Real-time monitoring capabilities

Accurate control and supervision are key to keeping tabs on purchase activities and ensuring high quality. Intuitive, advanced, and free software for purchase order management like TranZact makes that happen seamlessly.

How to Manage Your Purchase Orders With TranZact?

Digitization should be effortless and time-saving. TranZact is a solution that is easy to use and has several advanced capabilities designed especially for SME manufacturers.

With TranZact's purchase order processing software, you can sign up for free, create your company's profile with a few clicks, map your business processes, and automate core purchase operations to level up your game.

With TranZact's Transaction Dashboard, which acts as an inbox for both purchase and sales teams, staff members can easily create POs and manage all historic POs in a centralized location. This enables easy follow-ups and faster turnaround across purchase operations.

Read Also - Importance of Inventory Control

Automate Before Your Competitors Get an Edge Over You

Start your digital journey with TranZact's lifetime free plan. It is an expert purchase order and inventory management software. Get onboard to a platform that can digitize your entire business process so that you can operate your business efficiently, accurately, and without unnecessary delays.

FAQs on Purchase Order Management

1. What is purchase order management?

Purchase order management refers to the process of effectively handling and tracking purchase orders within an organization. It involves activities such as creating purchase orders, managing approvals, tracking order status, coordinating with suppliers, and ensuring timely delivery of goods or services.

2. What is purchase order management software?

Purchase order management software is a digital solution that automates and streamlines the purchase order process. It enables businesses to create, track, and manage purchase orders electronically, providing better visibility, efficiency, and accuracy in procurement operations.

3. What is the PO process?

The PO process, or the purchase order process, involves a series of steps that businesses follow to request, approve, and manage the purchase of goods or services. It typically includes creating a purchase order, obtaining necessary approvals, sending it to the supplier, receiving and verifying the order, and reconciling invoices with the purchase order.

4. What is procurement?

Procurement refers to the act of buying goods/ services from third-party vendors for business purposes.

5. What is a purchase requisition?

A purchase requisition is an initial request raised by a staff member on behalf of the company to buy goods or avail services from external vendors.

6. What is a Goods Received Note (GRN)?

A GRN is generated by the buyer after a quality check, once the vendor performs his side of the purchase order agreement and the buyer receives the consignment.

7. Why is purchase order management important?

Automating with software for purchase order management becomes essential for a business's overall productivity, growth, and sustainability in the long run. It is essential for companies that operate in highly dynamic markets to match competitors' pace with automation.

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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.