This content does not express opinions or opinions on expenses matters
Given the sustained economic uncertainty and rising prices due to inflation, reducing purchase costs remains a priority for most procurement stakeholders in 2024, and will then ensure continuity of supply and combat rising prices. To ensure that your business receives the products and services it needs at the highest quality price ratio, procurement experts strive to streamline purchase order management practices and implement order software such as Precoro.
Business stakeholders who are rapidly maintaining and using new technology solutions can significantly reduce PO processing costs and increase supply chain diversity. Conventional ways to manage purchase orders include spreadsheets and email, but the market has witnessed exponential growth in the number of organizations adopting purchase order software over the past decade. PO Automation offers businesses with immediate access to complete and up-to-date purchase information. Recently, another trend has caught the eye of the procurement world. This is the possibility of implementing artificial intelligence technology to streamline PO management.
It's safe to say that sourcing is a competition between companies that compete for the best deals without sacrificing product quality and customer loyalty. It's no wonder that artificial intelligence, which promises to revolutionize procurement, has become a “hot topic” among business stakeholders.
There is particularly strong hope for the role of AI in purchasing order processing. Artificial intelligence is expected to sift through huge amounts of data almost instantly, providing data-wrapped insights on smarter PO management strategies, optimization of daily operations and improving KPIs. There is also high hope that AI will predict supplier performance, changes in demand, or supply chain disruptions. By accessing open source supplier data and combining it with the company's internal know-how, AI is expected to help optimize PO costs by creating efficient negotiation strategies.
However, implementing artificial intelligence in procurement is a long-distance race that begins with the establishment of a high-quality purchase order management process, and is called a marathon. AI is here to strengthen purchasing practices rather than fixing flaws in the underlying PO workflow. If the basic order management process is not solid, adding artificial intelligence on top of it can do more harm than good.
Purchase orders are the backbone of the procurement process. To see orders being fulfilled smoothly, managers strive to ensure absolute accuracy of PO information, clarify approval workflows, establish transparent communication with suppliers, and set up PO tracking practices.
These fundamentals need to be covered before layering advanced technologies like AI. As artificial intelligence tools process available data and replicate established workflows, applying AI to flawed PO processes only amplifies existing inefficiencies. It is essential to be clear about what AI expects to handle. If your current PO workflow is error prone, AI could expand and multiply them.
For all businesses considering using AI to enhance purchase order processing, it is primarily rewarded to ensure that PO management practices are already solid. Below are some tips on what to focus on for efficient purchase order management.
Standards for each process – Viewing the PO should involve several well-assembled steps, from its creation and approval to payment and archive. Each PO-related action must be carried out in accordance with predefined guidelines, consistent with cost thresholds and budgetary restrictions, and in accordance with the company's ESG standards. Managers plan to provide as much information as possible to optimize the PO creation process. For example, catalog vendor information and item details. This reduces the time to place the PO for a few minutes. For regular purchases, organizations can choose to use blanket POS and avoid placing new identical orders completely over and over.
Custom and Simple Workflows – Because POs are designed to meet the specific needs of a department or employee, procurement managers route approval flows in order based on company roles and purchase cost thresholds. Customizing your approval workflow is a good habit, but it's still simple and only addressing employees who need to have a say, such as department leaders and finance managers, without overwhelming others.
Focus on high quality data – Access to accurate data is important for effective purchase order management. Introducing strong data governance principles and consistently recording PO-related information, procurement managers can easily estimate the required data and rely on it in their decision-making process. And of course, clean data is a must-have item afterwards when the company decides to implement AI.
Utilize software features – Procurement experts streamline PO management by leveraging procurement software for automated features and readily available analytics. Automation tools are also essential for tracking real-time PO status. In addition to this, the latest software solutions also support direct communication with suppliers.
Comprehensive Integrated System – By integrating ordering software with accounting tools or ERP, organizations can see a dramatic increase in PO processing productivity. Employees can save time and avoid the numerous mistakes that occur during manual transfer of purchase orders and invoice information between the various tools.
Understanding supplier KPIs – Part of the PO management process is tracking how suppliers successfully deliver orders and follow their financial health. The procurement manager regularly tracks various supplier KPIs, selects the most trustworthy procurement partners, and avoids the risk of ordering from suppliers that cannot be delivered under anticipated conditions.
Investing in teams – The big picture, where procurement managers continue to invest in team training, equip employees with the skills and knowledge they need to keep up with the latest developments in the procurement field. A consistent investment in employee competency can save a significant number of companies later on, for example, as the cost of optimised error prevention PO processing is low.
Artificial intelligence is certainly a game changer for doing business, but in procurement, AI is just as good as the process it supports. Successful procurement is always a priority and a priority, as it is built on professional purchase order management.
Featured companies
