How Purchase Order Management Benefits Your Supply Chain

How Purchase Order Management Benefits Your Supply Chain

09/01/2020
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In 2019, over $2 trillion worth of goods were imported to the United States. Yes, that’s trillion, with a T – a lot of goods. We can safely assume that all the product did not move flawlessly from its point of origin to its destination in the United States. Here’s what you may not have considered: your supply chain and imports contributed to that number. Is your network operating as efficiently as it could or should?

When a supply chain is not operating at peak, it costs money, with issues such as:

  • Lost or reduced sales due to lack of product or the wrong items on the shelf;
  • Additional costs for expedited transportation due to production delays or to meet unexpected demand;
  • Inventory loss due to theft or damage;
  • Unexpected supplier challenges with no backup;
  • Payment terms not aligned with receivables, resulting in negative cash cycles;
  • Unhappy customers when orders cannot be fulfilled as promised

The list goes on and on.

What steps can you take to improve your supply chain and revenue stream while avoiding the associated costs when things go wrong? Better management of your purchase orders and suppliers is a great place to start.

A successful Purchase Order (PO) Management solution combines technological, physical and financial tools for a complete supply chain solution. Like a three-legged stool, each leg is critical to support the whole.

Technological Tools

The technology is a critical piece of the puzzle. Spreadsheets and email can only get you so far. You need a scalable, reliable solution where all parties see the same information, with real-time updates and where exceptions are highlighted. Managing exceptions at the source is key to avoiding costly fines and penalties caused by inaccuracies.

Physical Tools

The physical component encompasses processes like production, packaging, consolidation and shipping. Coupled with technology, you can track your purchase orders’ lifecycles, significantly improving the flow of goods from order fulfillment through order logistics.   

Financial Tools

The financial aspect cannot be overlooked. Every delay costs money. How much exposure is in outstanding orders or transit? If your customers cancel their orders, what is the impact?

Implementing a PO Management solution addresses all of the above issues, ensuring your supply chain is in PEAK shape:

  • Eliminate delays, discrepancies, damages;
  • Improve cash conversion cycles;
  • Reduce costs through increased efficiencies;
  • Improve relationships with all supply chain partners, resulting in stable and predictable lead times

If 2020 has shown us nothing else, we’ve learned that companies’ inventory, both on hand and on order, need to be closely managed. It starts with the first mile, with a solid PO Management solution.

Who said logistics has to be complicated? We certainly didn’t. Contact our team to learn more.

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