We often see that companies use Excel or Word to create purchase orders. We know that purchase orders are a great way of gaining control of spend but the great values are created when adding a system to handle it all. Boston Consulting Group estimates that a company can gain a 10% cost reduction and at the same time reduce time spent by up to 30%.
We have looked into some of the main benefits you can experience when using a purchase order system;
You will save time
You can reduce time spent on most tasks related to a purchase
- You will reduce time on data entries
- Digital approval will take less time than manual processes
- Get overview faster when having all previous purchases or outstanding orders in one place.
- You will save time on invoice handling.
- Reduced time spent on budget control
With the whole team involved in the purchase process working together in a purchase order system they will all have access to the same information in real-time.
Your ensure good data quality
Using Excel and Word for your purchase orders can be a good start but it will always be a vulnerable solution, especially when it comes to updating purchase order numbers, address changes or other vital information on the purchase order. A purchase order system will ensure that correct PO number is assigned, and that all purchaser use the same PO data.
You will gain better control
In a purchase order system, important information related to a purchase order can be added beyond the purchase order sent to the supplier. It can be:
- Information related to processing of invoice (account, department, project)
- Information about billing or cost allocations
- File attachments related to the purchase order (e.g. quotes)
In a purchase order system, this can be added as fields or comments related to the purchase order, which means that you get all the relevant information in one place.
You get real-time budget control
While it takes a long time for an order to be executed until an invoice becomes visible in the accounting system, the purchase order system will see all committed costs at any time.
By using the purchase order system for budget control you get full control by having a “live” picture of how much is committed on a budget at any time. By having full control, you are able to make better decisions and will identfy possible budget overspendings early. ..
Matching a purchase order against invoice ensures that you capture any deviations from the invoice and that the purchase order system and the accounting system always are “in sync”.
Less time spent on reporting. More time available for proactive work following up budget status.
Easy access to history with a digital archive
- A searchable archive is a source of information that helps you in many ways. Here you can easily find previous orders, retrieve information about how much has been ordered from a vendor over a period, retrieve reports on orders related to a budget, etc.
- This is information that can help you better control costs or optimize rates and terms.
Simplify internal approval
Approval of purchase orders via email or paper is time consuming. Emails must be followed up and documents may be lost when handling paper. By using a purchase order system, you have a complete overview of which purchase orders are for approval and with whom. In addition, the history becomes traceable.
Improved data security
Through digital access control, you can decide who should have access to view, change, approve data in the purchasing system
Less people dependent than with manual processes
With a system in place you are no longer dependent on the internal IT expert or knowing what is sent from the mailbox to the individual. Everyone finds up-to-date information in the purchasing system
To read more about purchase orders click here
If you want to read the full report from BCG you can find it here: