Human or process errors lead to breakdowns and delays when companies use manual purchase order systems. And it used to be that companies had no other choice.
We polled the participant of our recent webinar, Automating Procurement on ServiceNow, and found that 36% are still generating POs manually and another 36% are doing them at least partially manually. So, 72% still struggle with manual purchase order processes. Only 18% said they have already automated.
But challenges that were once inevitable are now completely avoidable for companies that choose to use automated systems. In fact, thanks to leading-edge technology, it’s possible to automate as much as 89% of the purchase order process.
Let’s take a closer look at some of the big problems that come with manual purchase order systems, and how automating them can save time, money, and headaches.
5 Ways Manual Purchase Order Processing Fails
From authorizations to entering supplier codes, opportunities for human and processing errors abound when it comes to using a manual PO system.
Some common headaches that could be resolved by automating the purchase order process include:
1. Authorization Bottlenecks
Most accounting departments cannot accept a purchase order without the requisite authorizations.
So if even one signature is missing, whether because the physical paperwork wasn’t received or someone simply forgets to endorse a form, the accountants have to kick the PO back to the originator.
A small oversight can mean big delays in the purchasing process.
2. Supplier Name & Coding Errors
A keying error or coding mistake can lead to delays in the purchase order process, as can an incorrectly named supplier.
Not only does this put a wrench in the procurement pipeline, but it can also cost the company to find and fix the problems.
3. Handwriting Confusion
Unfortunately, doctors don’t have a corner on the market when it comes to illegible handwriting!
Forms that are filled out correctly but aren’t readable can cause the signatory or accounting department to return the PO to the originator.
4. Preferred Supplier Issues
Many companies prefer to contract with a select group of trusted, reliable, and reasonably priced vendors and suppliers.
If an employee submits a PO but hasn’t used one of the organization’s preferred suppliers, there’s no way to set up an automatic notification using a manual system. So the financial team may not approve the purchase order once it’s submitted.
Of course, there are times when using suppliers not on the preferred list is necessary, but such a situation may require additional approvals and signatures without which the PO wouldn’t get processed by the accounting department.
It’s easy to see how this element of the PO process can be easily held up without an automated solution.
5. Surges In PO Activity
Some organizations experience a higher volume of PO requests as the result of seasonal activities or business cycles.
And surges like these can overwhelm manual systems and create more opportunities for errors and delays.
How Procurement Automation Solves Purchase Order Problems
Automating the PO requisition system not only reduces the likelihood of errors and delays, but it can also create efficiencies that boost productivity and streamline the procurement process.
Error Rate Reduction & Fraud Prevention
Automation can reduce the errors that come with repetitive tasks which would include encoding purchase orders – especially those with similar or identical information.
Plus, illegible handwriting becomes a thing of the past when the PO process is automated.
Delays are much less likely to occur since accounting and finance departments receive complete, fully authorized and properly coded PO’s the first time around.
The fact is software that automates the PO Process produces error-free purchase orders, and in a faster, more efficient way.
Finally, automation carries another benefit: fraud prevention. A software-based purchasing program allows companies to automate workflows and mandate authorizations, reducing the likelihood of fraud.
Time-Saving Data & Document Management Capability
Before automation, with a manual PO system, pulling up information about supplier transactions meant digging through piles of paperwork.
Automating your PO system lets you pull up all transactions for any supplier at any time with the click of a button.
Plus, with an automated system, you get granular information at your fingertips for better spend visibility so you can fully understand the costs and trends that inform budgets and strategic planning.
Another benefit of automation is that, with this kind of granular visibility, companies are better able to negotiate with suppliers and vendors.
When you automate your PO system using the right software, it decreases the amount of time employees spend on generating PO’s.
For example, preferred suppliers are automatically available when the employee fills out the PO in the system, and if a non-preferred supplier is requisitioned, the system tells the employee which additional authorizations are needed.
Watch: Automating procurement on ServiceNow Webinar
Do you need to automate your procurement process and step up your company’s efficiency? If so, we invite you to explore ProcurementPath, the cloud-based productivity tool that streamlines procurement.