What can you gain from using purchase order automation?

Growing pains are all too common in business.   

Switching from manually handling orders to an automated purchase order system could seem like a typical ‘growing pain’, but the reality is that you will gain a lot from changing your processes. Adopting an automated purchase order system will make your daily operations easier and will undoubtedly save you time and money. Read this article to find out what purchase automation is, why you should automate your purchasing processes, and the benefits that can be gained.   

We’ll also cover the simple steps you can take to help your business move forwards. 

What is purchase order automation?      

Purchase order automation means using digital software to automate the purchase order process of a business. It can be incredibly helpful as it allows business owners to be more organized, better track the purchase orders coming in and be more efficient when ordering new stock.  

It supersedes the need for orders to be handled manually, can streamline processes, and ensure that purchase orders remain compliant. 

Every purchase order automation system is different, but Katana’s software is designed to give a business clarity on arguably its most important infrastructure. The Katana software can: 

• Manage inventory and track stock  
• Highlight the items where inventory is running too low  
• Make automatic calculations when orders are created and prioritized, so your procurement team can work more efficiently 
• Be customized for each business, for example, product units of measurement 
• Help you adapt your purchasing habits depending on material costs 

Why do you need purchase order automation?

As a business grows, its operations have to develop and become more complex, and each of these ‘leaps’ can be difficult to manage.   

It makes sense to keep costs as low as possible when you’re a small business. This often means tracking purchase orders in a very traditional way – manually with an excel document or similar.  

However, manually handling purchase orders can lead to mistakes being made due to human error and there being simply too much information to keep track of. It can also become time-consuming and laborious to manage orders and stock levels.   

Ultimately, procurement operations should be at the heart of any business and running smoothly. If paper orders are missing or being duplicated and checking stock is taking too long, then it is time for a business to explore an automated purchasing system.   

An automated purchase order system can help systematize a business’ procurement workflows and minimize unnecessary and potentially costly mistakes. Any mistakes that do get made are quickly spotted by the automated purchasing system and can be rectified before any damage is done. It can also ensure that a company’s unique purchase policies are adhered to.   

Most businesses will grow to a point when the benefit of upgrading to an automated purchase order system substantially outweighs the cost of mistakes being made.   

What are the benefits of purchase order automation?        

There are some very clear benefits of having an automated purchase order system. Generally speaking, it gives you greater visibility and less room for error. Here are some of the other benefits.  

1. Incredible integration

Most businesses use several different software applications, which can lead to difficulties when you need a complete view of your purchase orders, stock, and production timelines.  

Integrating and automating your systems can optimize your business’ capabilities by cutting out inefficient practices. Unifying your purchase order automation system and integrating your data can help you to make timely and cost-effective business decisions. Purchase order automation in manufacturing systems like Katana are designed specifically to be able to work seamlessly with other accounting and purchasing software. 

2. Minimize mistakes   

Mistakes do happen in every business but cutting out the confusion caused by multiple manual systems is an easy way to reduce errors and improve accuracy. Purchase orders are technically legal contracts between a buyer and a seller, so they must be processed correctly. Further to this, errors can also cost a business both time and money.  

Adopting an automated purchase order system can drastically reduce errors and improve workflows.

3. Support suppliers

Not only does adopting an automated purchase order system help your business, but it also helps your suppliers, vendors, and clients. Suppliers get automated POs much quicker — your supply chain works more efficiently, and your clients receive a better service — a win-win-win all round! 

4. Better budgeting

It’s easy to understand how reducing the number of errors being made and making your business more efficient can do wonders for your budget. But your budget tracking itself can also be improved by having an automated purchasing system. Audit trails are more straightforward, invoices can be better tracked and expense management is simpler. Not only this, but an automated purchase order system can also help a business to operate in multiple currencies. And of course, all of this is better for your bottom line.  

5. Perfect Procurement

Automatically tracking your purchase orders also means that your procurement team is better prepared: 

• Your material requirements will be clearer 
• Your inventory will be managed more efficiently in real-time 
• Your supply chain will be more informed 

6. Control Compliance

There’s nothing worse than an employee who goes ‘rogue’ with a purchasing process. When you implement an automated purchase order system, you can include details like lists of approved suppliers, specific audit trails, and ESG (environmental, social, and corporate governance) requirements which means that certain protocols have to be followed, and thus company compliance is improved. 

How can you implement an automated purchase order system?

While the process of converting your businesses’ processes into an automated system might seem daunting, the reality is that there are some simple steps that you need to follow:  

1. Choose the software — Decide your requirements and then find a software package that best supports your processes and integrates with the other software your business runs on   
2. Connect your finances — Once you have chosen your automated purchase order system, the most important step is to ensure you link it with your accounting system, invoicing data, and purchasing workflow   
3. Personalize it — The next step is to ensure the system is tailored to your company. Make sure that any purchasing, invoicing, and management processes are defined so that the new system is working in the way that you need it to  
4. Time for automation — Once your systems and workflows are defined, it is time to get your automated systems approved and ready to go. Automated purchase orders will soon follow suit  
5. Training — Make sure your employees are fully trained on the purchase order automation system and understand how it works. Ensuring that they are advocates for the process and believe in how much it can help will mean the implementation of it is much smoother 

Thousands of manufacturers have used Katana to build better businesses. Get started by booking a demo with Katana today.  

James Humphreys

Head of Content Marketing

James Humphreys has produced content on manufacturing and inventory management practices for 6+ years. He began his journey into writing via the creative industry, writing and producing plays, some of which toured the UK and Europe.