Five strategies to implement purchase order automation

If you’ve navigated manual purchase order (PO) workflows, you know the frustration of bottlenecks and inaccuracies that slow down the entire process. You may have to track down stakeholders one by one so they can approve POs, or you might face buyers who purchase from unapproved vendors, which results in overspending. 

Often, you may feel like you’re scrambling to keep operations moving. However, there’s a simple solution to these headaches that handles these routine tasks with ease: purchase order automation.

With this solution, you can focus on solving larger problems and finding innovative ways to be more efficient and drive cash flow rather than managing every step of the workflow. 

Ready to create a strategic purchase order management process that’ll help you accomplish all this and more? Read on to learn how.

What is purchase order automation?

PO automation occurs when your team uses software for purchase order creation, approval, and management. An automated process can relieve your team of a high-touch, time-consuming workflow by handling day-to-day tasks instantly.

It’s also part of a growing push to streamline procurement workflows using technology. According to a report from Economist Impact, 57 percent of survey respondents list digitizing procurement as a top priority.

Automated purchase order management software frees up your time, allowing you to focus on cost savings and procurement efficiency.

Common pain points in manual PO processes

Manual PO workflows can create several pain points—but the good news is that PO automation can resolve some of the most common challenges. Here’s a few to keep in mind:

Decentralized tracking

A scattered PO management system means controlling your PO lifecycle is challenging. If you only have a snapshot of your organization’s purchase order process, everything from inventory management to supplier performance will be murky. This makes managing procurement operations effectively much more difficult. 

Additionally, you’re less likely to spot discrepancies in invoice payment terms, conduct effective supply chain management, find PO approval bottlenecks, and coordinate supplier management without centralized tracking.

Manual approvals

During a manual PO approval workflow, one person or team reviews a PO and compares it to related documentation. But this type of PO system is time-consuming and error-prone. For instance, you may accidentally overlook a discrepancy that results in overpayments or a violation of your supplier contract terms. 

And in addition to the potential for human error, manual processes force you to track down each individual stakeholder to get their invoice approval. Rather than spending time on strategic work that supports organization-wide growth, you’ll have to work through every step by hand. 

Lack of audit trails

Manual processes make it difficult to track what happened and when. However, you need this information to be accurate to ensure contract and spend compliance and help you quickly spot potential issues before they disrupt your workflows. 

Accurately collecting data as POs move through the process is the key to having a firm grasp on your network. Without real-time visibility and a trackable audit trail, your organization is more prone to fraud, non-compliance, and human error.

Siloed tools

A system of disconnected tools may hinder your ability to run an accurate, efficient PO management process. For example, as you try to two- or three-way match invoices, you might waste valuable time toggling between tools as you search for supporting documentation. At the same time, siloed tools mean this data only lives in one place, making it inaccessible to stakeholders who could benefit from the information.

Most PO accounting and procurement teams face these challenges—but with strategic implementation, automated PO processes can easily resolve them. 

5 strategies for implementing purchase order automation

Follow these simple steps to boost the odds of your procurement strategy's success and regain control over your operations with an automated purchase order system: 

1. Map current processes

Start by outlining your current and ideal PO management processes. While you do this, you should also take a look at “shadow” procurement activity and unstructured approvals to get a realistic sense of how stakeholders handle POs right now. 

Once you’ve outlined your current process, compare the ideal and actual workflows to find specific problem areas that a PO automation solution can help you fix. 

2. Configure approval workflows

There isn’t a one-size-fits-all workflow for PO management. For instance, one team may need an extra verification step so their workflow won’t follow the same path as another team at your organization. 

That said, based on stakeholder insights and trends you identified in unstructured workflows from step one, build custom purchasing approval workflows. When a PO management process matches a team’s real needs, you can cut down on unauthorized spend and ensure compliance. 

3. Integrate with existing systems

POs are a key part of tracking and managing your procurement operations. Because of this, the solution that handles PO automation needs to integrate with your existing systems. 

Seamless integrations ensure that you have consistent procurement data throughout all your systems so you aren’t grappling with potential duplicates, inaccuracies, or missing POs. Additionally, when your systems talk to each other, everyone at your organization can access the same information, which fosters org-wide transparency and ultimately translates into accuracy and efficiency. 

4. Train and onboard stakeholders

Any new process or solution’s success relies on getting the people who are running it on board. From the beginning, be sure to loop in your IT, accounts payable, procurement operation, and finance teams. These teams need to be on the same page since they need to work cross-functionally. 

Be sure to also create a centralized place to house workflow documentation and instructions. Doing so makes it easy for stakeholders to answer questions independently and increases the odds of compliance with organizational policy.

5. Monitor and optimize

During the first few weeks and months, pay close attention to the results of your process changes. You’ll get a sense of how well the automation is working by measuring a few key performance indicators (KPIs), like error rates and PO arrival timelines, and touching base with stakeholders. Based on feedback and these KPIs, you can alter parts of your process over time to craft the best workflow for your organization. 

But remember that rolling out PO automations isn’t a one-time task—it needs ongoing maintenance. By iterating on your process, you can drive profitability and stay competitive. 

Best practices to maximize PO automation efficiency

After you have a strategy, keep these few best practices in mind for more effective purchase order management:

Standardize vendor onboarding

Consistency is key as you automate different parts of your PO management process. To help with this, build a standard onboarding process for all your vendors. Not only does a standardized process streamline your work, but it also fosters predictable and reliable collaboration, which boosts the potential for quality supplier relationships.

Here’s where Amazon Business can help: The solution allows you to create and share custom vendor catalogs. Stakeholders then see these preferred vendors when searching for goods, which reduces rogue spend and the risk of straying from organization purchasing policy. Additionally, you can set up approval workflows in Amazon Business that ensure the right stakeholders review POs and help your team boost compliance with internal and external policies and regulations. 

Add PO numbers during checkout

To help streamline operations, consider the ability to add PO numbers to orders at checkout. Not only does this step simplify order tracking, but it also aids in reconciliation. Connecting POs to corresponding invoices or other supporting documentation manually consumes valuable time and resources. But, if the PO number appears on the PO from the moment of purchase, you can take advantage of automation. 

Amazon Business supports automation by integrating with over 300 procurement systems. Such an in-depth systems connection allows you to automate PO generation, approval workflows, and sync data between Amazon Business and your internal systems.  

Enforce budget controls

One of the best ways to control procurement costs is to create and enforce budgets. Based on the data you gathered in earlier steps, set departmental, user, and general ledger budgets. This data can also help you spot places where teams might overspend. Then, use all this information to boost spend management for each team and set guidelines in your automation solution to enforce them.

In this case, it’s beneficial to look for a solution with features like role-based permissions. Amazon Business’ Guided Buying solution, for instance, allows you to set guidelines for each stakeholder, including a budget, and nudges stakeholders toward your contracted vendors. 

Use real-time analytics

Real-time analytics often lead to good decision-making. That way, you’ll see in the moment where operational bottlenecks leave POs piling up or a lack of transparency means buyers purchase from unapproved vendors. Greater visibility allows you to act quickly and avoid costly disruptions to your workflows. 

To make sure your analytics are as reliable as possible, begin tracking metrics from day one. Data points like budget variance and PO cycle time are most impactful when they cover more time. To accomplish this, try Amazon Business’ Spend Visibility (a Business Prime feature). This function automatically tracks your purchasing patterns so you can use real-time buying trends to simplify creating budgets, resolving compliance issues, and forecasting.

Enhance enterprise efficiency with PO automation

PO workflows are a core function of your procurement management. They ensure that you know the order status of each shipment, can effectively manage costs, and spot potential problem areas before they become massive disruptions. Automation simply makes it possible to track and coordinate each PO effectively while remaining agile in the face of supply chain disruptions. 

Yet to enjoy all the benefits of PO automation, both now and in the future, you need the right automation software for your team. That’s where Amazon Business comes in. With our integrations and easy-to-use automation, we give you a simplified way to manage your POs. 

Talk to our team today to discover how our solution can help you automate your PO workflows, reduce manual inefficiencies, and accelerate smarter procurement decisions.