Does your business deal with procurement and inventory management on a regular basis? If so, you may want to consider utilizing purchase order tracking, especially if you have a growing business.
Purchase order tracking is crucial for successful and efficient procurement management. In fact, it can increase organizational performance during the procurement process when done correctly.
Using purchase order tracking software as a business owner will simplify the process and provide you with the information you’re looking for. This blog post covers all there is to know about the process and three tips on how to use PO tracking software.
Purchase Order Tracking Meaning
Purchase order tracking refers to the process of monitoring the real-time status of an order. This manages the purchase order cycle which stems from creating a purchase order. The creation of this order can be done using a purchase order template.
The tracking system allows businesses and their procurement team to pinpoint inefficient steps within their procedures. Then, they can address these steps and improve them as needed leading to a more efficient procurement process.
Purchase orders are binding legal contracts between buyers and suppliers. Be sure to familiarize yourself with the difference between purchase orders vs invoices.
Using purchase order tracking allows businesses to ensure that they’re receiving the right goods including in the proper quantities and qualities. This is crucial for maintaining optimal inventory levels or par level.
Key Takeaway: Purchase order tracking is necessary for a successful procurement process by improving organizational performance.
When Should Purchase Order Tracking Be Used?
Purchase order tracking should be used before the delivery of the order. This is when it’s most useful because you can determine the stage your order is in.
Three common instances when businesses use purchase order tracking include:
- Creating 10+ orders each month
- Working with numerous suppliers and items
- Placing purchase orders from multiple locations
It’s important to stay on top of each purchase order once it’s placed. When you have multiple orders to manage at one time, purchase order tracking software can be helpful.
Placing multiple orders from two suppliers can be easier to manage compared to when working with multiple suppliers. This is because you can simply call the supplier and find out the status of your orders.
However, working with multiple suppliers makes the process difficult. That’s where purchase order tracking comes in handy.
3 Modern Purchase Order Tracking Methods
These days, purchase orders aren’t as paper-intensive as they once were. This is because of the new advancements in technology such as purchase order tracking software. Similar technology includes restaurant technology.
Purchase order tracking systems reduce the amount of manual labor that is required and the paperwork associated with the process. It also improves accuracy and consistency throughout the procurement process. Familiarize yourself with what is procurement to better understand the procurement vs purchasing process.
Most PO tracking systems allow businesses to organize their purchase orders. This reduces the number of mix-ups that can happen and makes it easy to pay invoices for the right purchase order. Be sure to familiarize yourself with what is an invoice and the invoice process.
Electronic purchase order tracking makes it possible to obtain all essential information regarding the PO. This includes order dates, supplier information, and original purchase requests.
Three modern purchase order tracking methods include:
1. Using Excel for Purchase Order Tracking
Excel offers a simple way to set up a purchase order tracking system. It’s possible to purchase or download purchase order tracking templates to use in Excel.
One of the benefits of using Excel for purchase order tracking is that it’s possible to have little-to-no calculation errors within each purchase order. There’s also less of a chance for the documents to get lost.
All purchase orders that are generated through Excel are sent via email which makes them trackable and retrievable. They are digitally stored compared to being stored in file cabinets on paper.
However, it’s important to be mindful of the fact that an Excel purchase order can be accidentally emailed to the wrong person. This makes it possible for purchase orders to be tampered with.
In order for a purchase order to become legally binding, the buyer and the seller have to sign it. That means that businesses will have to print out purchase orders from Excel in order to sign and approve them.
2. Procurement Systems
Most procurement systems allow users to generate and track purchase orders. They also have integration options with other systems, including supplier systems, that handle similar procurement administrative tasks.
With procurement systems, businesses automate the purchase order tracking process and streamline their workflows. It’s possible to use cloud-based systems for real-time PO tracking from remote locations and devices.
When dealing with multiple purchase orders, it can get confusing having to pair up invoices with the respective purchase order. However, with procurement systems, the purchase order number is automatically linked with the right invoice. This avoids mix-ups.
3. Inventory Management Systems
The inventory management process is similar to the procurement process. The same goes for their respective systems. In fact, procurement systems often include inventory management.
If your business doesn’t need a full-scale procurement system, you may be able to use an inventory management system. This will allow you to track your inventory and your purchase orders.
Cloud-based inventory management software provides automation, security, and real-time tracking options. This is essential for purchase order tracking.
Purchase Order Tracking Software
The purpose of purchase order tracking is to maintain control of the process, so it can be consistent each time. Automated PO tracking software makes this possible, and it ensures that all protocols are followed.
It’s also possible to use an electronic PO tracking system. This eliminates the need to manually create and track purchase orders. Instead, this system provides better processing and purchasing compliance.
Six Benefits of purchase order tracking software include:
- The ability to instantly track purchase orders. There is no need to sift through spreadsheets and emails to track purchase orders. With purchase order automation, you can get the status of a PO at any time, from anywhere, using any device. It provides access to order information such as order dates, supplier details, and original purchase requests.
- Automated workflows. It’s possible to automate purchase order tracking. As a result, you can save time, limit errors, and reduce costs.
- Real-time insights. With PO tracking software, you can get real-time spending insights from visual and customizable reports.
- Paperless order approvals. All purchase orders must be signed by the buyer and supplier to be binding legal documents. With purchase order tracking software, it’s possible to approve POs using digital forms and checklists.
- Streamline approvals. Specific users can collaborate on approvals and decision-making processes with automated workflows.
- Role-based access. PO tracking software allows businesses to provide user-specific access to each purchase order based on who needs it. This ensures transparency while also providing the option to limit access and increase security.
Frequently Asked Questions About P.O. Tracking
There are many procurement and inventory solutions available for businesses to utilize. Picking the right one is based on your business needs and the capabilities of each solution.
If your business places orders regularly, you may need to take advantage of purchase order tracking. This solution will improve efficiency and organization within your business process flow.
To learn more about purchase order tracking, read through the following commonly asked questions:
Is a PO Number a Tracking Number?
No, a PO number is not a tracking number. A purchase order is a unique number assigned to each individual purchase order. Purchase order numbers help buyers and suppliers track and reference the orders they receive and send.
What Is the Purpose of a PO Tracker?
The purchase of a PO tracker is to view the real-time status of a purchase order. With a PO tracker, you can determine when an order has been accepted, processed, picked, and shipped.
Why Is a Tracking System Important?
A tracking system is important to have because it enables businesses to optimize the best route for delivery. This leads to proper route management and delivery route optimization. Tracking systems make it possible to track the exact location of the order.