Supply chain management is a complex task. It would help if you took many risks to ensure the smooth flow of supplies. Procurement teams often bear the direct impact of any mistakes in order processing. While there is a decent space to accommodate errors, you may not be able to afford frequent errors. Supply chain management is the corridor of investment for any enterprise. To ensure risk-free PO management, you need purchase order approval software.
The PO approval software is designed to minimize the human errors involved in supply management. Procurement teams can get significant benefits from using this tool. They can maintain a safe product delivery schedule and track each item correctly. To understand how a purchase order approval tool helps eradicate human errors, we will first look into some common PO mistakes that affect supply chain management.
Problems With Manual PO Management
Most of the problems with PO management occur due to the manual processing of information. If you have hundreds of POs daily, there is an excellent chance of information mismanagement. Many enterprises undergo back and forth in product supply management. Regardless of the expertise of the procurement team, the extensive amounts of symbolic data can be challenging to handle.
To ensure the on-time delivery schedules, procurement teams have to keep up an excellent pace to verify POs. The process often becomes overwhelming to manage. The manual handling of PO data can lead to a range of problems. Firstly, there is no way to centralize the information. Poor coordination can raise difficulties for the procurement teams.
Moreover, the absence of a centralized purchase management tool also makes it difficult to track online and offline POs. While the procurement experts may try their best to ensure accuracy, it is relatively hard to avoid human errors.
Common Mistakes in PO Processing
To understand the importance of purchase order approval software, let’s look at the common mistakes to avoid.
Lack of Precision in Data Handling
The most common mistake in manual PO management is the lack of precision. Purchase orders and other procurement forms contain a lot of information. It is worth remembering that none of the listed information is less critical. Mainly, the procurement team organizes the figurative and descriptive data into blocks. Each category contains a unique set of valuable information about the products. This information acts as a bridge of correspondence between the buyer and the supplier.
Manual data handling can lead to missing out on some parts of the critical PO information. With hundreds of POs arriving daily, it may be challenging to handle the data accurately. For example, let’s assume that an automotive company wants to procure black-colored top-of-the-line luxury SUVs for its executive customers. However, the PO form states that the automotive company requires X number of SUVs; it is evident that the PO form misses a significant amount of precise information.
Invoicing Errors in Supplies
Another common mistake is the inaccuracy of product invoices. Due to the extensive workload, procurement teams often ignore the minor details in POs and invoices. One such error can lead to a series of problems. You may end up associating a wrong invoice with a product. As mentioned earlier, POs often contain intricate product details. The manual management of POs and product invoices lacks a standard structure.
With PO approval software, the procurement teams can avoid such mistakes. All the product information can be scanned and maintained to access quickly when needed. Moreover, the PO approval tool enables them to develop a unified invoicing structure.
PO Approval Without RFQ
Large enterprises follow a systematic formula for procurement management. The process starts with a Request for Quotation (RFQ) lodged by the enterprise. The supplier receives the RFQ to share a quotation based on the list of supplies. Once the enterprise agrees to the given quotation, it sends a PO form to the supplier. However, many organizations tend to break the cycle by directly sending a PO form to the supplier. This leads to significant problems, including costing, unaddressed terms and conditions, expiration of supplies, etc.
In such cases, the procurement team of the enterprise has to send back the supplies to request new ones. While this may be correct, the enterprise must bear additional costs and push back the timeline. On the other hand, the purchase management tool eliminates the possibility of miscommunication between the buyer and the supplier. By following a unified rule to process RFQ and sending the PO form, enterprises can save the back and forth.
Using Paper-Based POs
Digitalization has changed the way we work. Almost every small and large enterprise uses computers to handle valuable data. However, some enterprises still rely on paperwork. While it may seem easy, the paperwork raises more problems than we know. Firstly, using paper-based POs can take time to circulate between departments. Procurement teams may need days to send it to the supplier. While this may be correct, paperwork can be hard to comprehend. Imagine a supplier sending the wrong supplies due to miscomprehension. It can raise too many problems at once.
Moreover, creating paper-based POs can double the time and effort of employees. They may need to input accurate information in the document and print it with proper formatting. Furthermore, paperwork can easily be lost when the procurement team handles back-to-back order forms daily.
Resolving Problems with Purchase Order Approval Software
The problems mentioned above may be the tip of the iceberg. The manual PO data management can raise a series of unprecedented issues. However, enterprises can eliminate all these errors using the purchase order approval software. Procurement staff can create, modify, store, send, and receive PO forms using a single digital platform.
Microsys offers a fully-functional PO approval software suitable for all enterprises. SimplyPurchasing streamlines procurement operations by minimizing the possibility of errors in extensive data handling. If you want to enhance your enterprise’s procurement operations, you can contact Microsys for efficient solutions.