What Is Purchase Order Automation? A Guide To Automate PO

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In today's digital age, automating business processes isn't just a luxury—it's the secret weapon smart companies employ to gain a competitive edge. One such process that can benefit greatly from automation is purchase order processing. Let's be real: if you're handling purchase orders manually, "efficiency" probably isn't a word you'd use to describe your workday. The traditional manual approach involves piles of paperwork, manual data entry, and hours of back-and-forth communication with suppliers and approvers. It's slow, tedious, and inclined to human error.

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However, with purchase order automation, organizations can streamline their procurement processes and significantly reduce the time, effort, and resources required to manage purchase orders. Automating purchase order processes (like order creation, approval, and tracking) not only saves a lot of time and manual effort; it also helps reduce errors and increases visibility and control over the entire procurement process. Instead of wasting hours looking for a specific PO or chasing down approvals, your team can focus on more strategic tasks that add real value to the organization.

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What Is Purchase Order Automation?

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The simplest way to define purchase order automation is: "using technology and digital software to automate the process of creating, approving, processing, and managing purchase orders in a business." This typically involves utilizing software that automates the creation and submission of purchase orders, as well as the routing, tracking, and approval of those orders, all in a digital environment.

With an automated purchase order system, businesses can streamline their entire procurement process, from the initial request to the final payment, saving time, effort, and resources. This not only makes the process more efficient but also reduces the risk of human errors that can occur with manual data entry.

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Automated PO can save between 80% and 90% of the time used in purchase order processing. (Source: Internal analysis of turian’s customer data). 

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The main goal of purchase order automation is to reduce the manual effort, time, and errors that come with manual purchase order processes while also improving accuracy, efficiency, and visibility in the procurement cycle. By implementing purchase order automation, businesses can achieve a more streamlined and organized procurement process that significantly improves their overall operations.

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The Importance of PO Automation for Businesses

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Now that we know what purchase order automation is, let's get to the crux of the matter: why is it important for businesses? Well, there are a number of reasons why organizations, big or small, should invest in automating their purchase order process. Here are some of the most significant ones:

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1. Modernization of Processes

Let's face it. Manual purchase order processes are outdated and inefficient. While they may have worked in the past, they simply can't keep up with the modern business world's needs. With purchase order automation, businesses can digitize their procurement processes and stay ahead of the curve. An automated purchase order system creates a digital environment where everything from creating POs to receiving and approving them can be done electronically. No more printing, faxing, or scanning documents –  everything can be done online and is easily accessible from anywhere.

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2. Smooth Business Operations

For any business to be successful, it is crucial to have smooth and efficient operations in place. But with manual PO processes, it's quite hard to achieve that. Why? Well, let's say you have to create a PO, send it for approval, track it, and then enter the data into your ERP or CRM system manually. This tedious process not only takes up valuable time but also increases the chances of human errors (e.g., incorrect data entry or missing information), especially when dealing with a high volume of POs. The result? Delays, discrepancies, and overall inefficiency in business operations. 

By implementing automated purchase order systems, all these tasks can be streamlined and completed quickly, accurately, and with minimal effort. PO automation solutions offer features like automatic data capture and validation, automated approval workflows, and real-time integration with systems (e.g., ERP/CRM), reducing manual work and potential errors. This, in turn, leads to smoother operations, faster response times, and better overall performance of your business.

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3. Higher Reach Of Ideal Suppliers

Automation takes care of repetitive tasks like vendor registration, sending RFQs, and managing supplier information. This allows procurement teams to focus on what matters most: building relationships and identifying the best suppliers for their needs. As a result, businesses can connect with a wider range of potential suppliers, securing better prices and higher-quality goods and services.

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4. Improved Visibility and Control

With manual purchase order processes, it's easy to lose track of where things are and what needs to be done. Who has the PO? Has it been approved? What's the status of the order? These are just some of the questions that can arise when managing purchase orders manually. Automation systems offer real-time visibility into the status of purchase orders, enabling stakeholders to track the progress of orders and pinpoint any bottlenecks that may be impacting the process, like delayed approvals or missing information. Moreover, with automated notifications and alerts, everyone involved in the procurement process can stay up-to-date about the status of orders and take necessary actions (e.g., approving or rejecting an order) in a timely fashion.

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5. Data-Driven Decision Making

With automated purchase order systems, businesses can capture and analyze data related to their procurement process in real time. This data can provide valuable insights into things like spending patterns, supplier performance, and overall efficiency of the procurement process. By leveraging these insights, businesses can make better decisions to optimize their procurement operations and achieve cost savings.

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How to Automate Purchase Orders: 5 Steps

Ok. Now, it's clear why purchase order automation is crucial for businesses. The next question is. How to automate purchase orders? Well, the specific process may vary based on your business needs and the automation system you choose, but there are generally five essential steps to automating purchase orders.

These may include, but are not limited to:

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1. Identify a PO Automation System That Fits Your Needs

The first step to successful purchase order automation is to identify a purchase order automation system that fits your specific business needs. Do your research and evaluate different options to ensure that the software you choose can handle your current and future needs. Look for features such as:

• Ease of use: A purchase order software should be user-friendly and intuitive for easy adoption and minimal training time.
• Flexible workflows: Every organization has its unique workflow, so look for software that can adapt to your specific business structure.
• Integration: Ensure that the software can be easily connected and sync with your existing business systems, such as ERP, CRM, or accounting software.
• Real-time visibility: A good purchase order software should provide real-time visibility into your entire purchase order process, allowing you to track expenses and identify any potential fraud or discrepancies.
• Scalability: As your business grows, so will your purchase order volume. Make sure that the software you choose can scale with your business and handle a larger volume of POs without any performance issues.

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2. Integrate With Your Financial Systems

The next step is to connect your purchase order automation software with your financial systems (e.g., accounting system and/or ERPs) to ensure all your vendor databases and transactions are synced across different platforms. The software provider should offer support to set up this integration and ensure you have all the necessary data for your custom needs. This step will streamline the purchase order process, reduce the chances of errors, and provide real-time visibility into the status of orders.

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3. Set Up Approval Workflows

After integrating your PO automation software with your financial systems, the next step is to set up and enforce rules, guidelines, and approval hierarchies for purchase orders that align with your business's policies. This entails the following steps:

• Defining the approval workflow based on your organization's hierarchy.
• Establishing spending limits to regulate the amounts designated for each PO.
• Assigning user permissions, access levels, and actions according to specific roles in the procurement process.
• Enabling alerts for relevant stakeholders about the POs' status, pending approvals, and other significant updates.

This step will strengthen security, improve communication, and foster transparency across the procurement workflow so that all stakeholders are aware of the process and their responsibilities.

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4.  Supplier Selection

Once you have your approval workflows set up, it's time to select the suppliers for your purchase orders. This step involves researching and evaluating potential suppliers' options based on various factors, such as quality, delivery timeframes, pricing, and supplier reputation. It is crucial to choose a supplier that aligns with your business's values and goals and has a track record of delivering quality products or services. The purchase order automation software can help streamline this process by providing a centralized database of all your suppliers, their contact information, and performance metrics.

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5. Order Generation

After selecting the suppliers, the ERP system generates the purchase order automatically based on the information provided. The document includes all the necessary details, such as the product description, unit price, quantity, requested delivery date, total cost, and any specific shipping instructions. The purchase order also specifies the agreed-upon terms and conditions, like payment details and any applicable discounts or warranties. The software then sends the PO to the supplier for confirmation, and once approved, it is automatically recorded in the system for future reference.

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Benefits of Automated Order Processing

Transitioning from manual PO methods to an automated purchase order process is a smart move for any organization (big or small) to stay competitive in today's digital age, drive growth, and achieve operational excellence. Here are some of the key benefits you can expect from automating your purchase orders:

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1. Increased Team Efficiency

Managing a large volume of purchase orders manually can be tough to handle. Automated purchase order systems help your teams focus on more strategic tasks that require human input and creativity. With a cloud-based PO automation system, all the data is centralized and easily accessible, speeding up the process and boosting operational efficiency.

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2. Reduced Errors

Purchase orders are legally binding contracts between a buyer and seller, so it is crucial to process them accurately. However, with manual PO processing, there is always a risk of human errors. These errors can be as simple as typos or as significant as incorrect quantity or pricing, which can lead to costly mistakes that not only affect your bottom line but also damage your relationship with suppliers.

With an automated purchase order system, these errors can be drastically reduced. If there are any errors or discrepancies (like missing or incorrect information), the system can flag them and send alerts to the appropriate team members for review and correction, ensuring accuracy and efficiency in your purchasing process.

This means you don't have to deal with the back and forth between the buyer and seller to rectify errors or worry about missing information or duplicate POs. By automating your processes, you can ensure the accuracy and quality of your data, leading to better decision-making for your business.

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3. Cost Savings

Manual purchase order methods, like paper or Excel-based processing, are time-consuming and incur higher labor costs due to the need for printing, scanning, and mailing. These expenses quickly add up for organizations with high PO volumes. By automating the purchase order process, businesses can significantly reduce labor and resource costs, allowing funds to be redirected to more strategic areas. Plus, automated purchase order systems scale effortlessly with your business, eliminating the need to hire extra staff during peak periods and ensuring long-term cost savings.

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4. Time Saving

Time is money, and it is a precious resource that organizations cannot afford to waste, especially in today's fast-paced business environment. Manual purchase order processing can take hours or even days to process POs, which not only delays the delivery of goods but also causes frustration for both buyers and suppliers. However, with an automated purchase order system, POs can be processed within minutes, speeding up the entire procurement process and ensuring timely delivery of goods.

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5. Flexible Workflows and Customization

Purchasing automation software allows for flexible workflows and customization options, providing organizations with the ability to tailor the system according to their specific business needs. This means you can set up rules and approvals for different purchase orders based on factors like item type, supplier, or budget thresholds. You can also create blanket POs for recurring orders and set up automatic approvals to streamline the process. No matter how unique your purchasing process is, a robust purchase order automation system can be customized to fit your requirements, whatever they may be.

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Revamp Your Operational Procurement with turian's PO Automation Solution

If you're looking to boost efficiency, minimize error rates, and save time in your purchase order process, it's time to consider automating your POs with turian. Our cloud-based purchase order automation software is backed by cutting-edge AI technology, including large language models (LLMs) with custom business rules and advanced data querying techniques to streamline your procurement operations.

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turian can automate a variety of procurement-related processes that happen in your inbox and ERP system, including approval workflows, PO confirmations, invoice processing, RFQs handling, and supplier communication. With our new functionality to chat with documents, you can directly ask turian about specific details of your contractual agreement with your supplier, or get quick answers to questions related to your PO, like will all products be delivered on time? This feature allows you to instantly access and confirm critical details, ensuring proactive management of your procurement process.

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Our AI Assistant can extract data from emails and attachments (regardless of format or language) and compare the suppliers' information with what is in your ERP system to ensure accuracy. But turian doesn't just automate PO processes; it intelligently determines the next actions based on predefined business rules, such as updating the ERP and purchase order system, asking for missing information, or even seeking user confirmation.

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Apart from that, turian can also generate responses to common supplier inquiries in a human-like tone, ensuring smooth communication and maintaining good relationships with your suppliers.

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With turian, you can also set granular access controls and review and approve sensitive actions, giving you full control over your procurement automation. Plus, our AI-powered purchase order automation solution offers real-time analytics and dashboards to provide valuable insights into your procurement processes, allowing you to make data-driven decisions, identify bottlenecks, and improve your operations. If there are certain key transactions you feel uncomfortable automating, our solution also allows employees to stay in the loop and have full oversight and control over these cases.

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The best part? turian can be seamlessly integrated into your existing ERP systems, like SAP, MS Dynamics, Netsuite, or ABAS, without any disruption to your current operations. If you're still manually processing purchase orders, it's time to revamp your operational procurement with turian's PO automation solution. We also offer a free Proof of Concept (PoC), so you can try our solution risk-free and experience the benefits first-hand. 

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