Efficient purchase order approvals are critical to running a business smoothly. However, manual processes can be time-consuming and prone to errors. Automated systems can help streamline the process, making it quicker, more accurate, and more cost-effective. In this article, we’ll explore the benefits of automating purchase order approvals, how to build an automated workflow, and what to look for in purchase order approval software.
The Challenges of Manual Purchase Order Approvals
Manual purchase order approval processes can be inefficient and costly. Paperwork can be lost, approvals can get delayed, and data entry errors can occur. These challenges can lead to missed deadlines, miscommunication, and even lost orders. A bottleneck in the approval process can cause the entire procurement process to come to a standstill, resulting in a loss of revenue.
Moreover, manual purchase order approval processes are not scalable. As the number of purchase orders increases, it becomes increasingly difficult to manage approvals manually. Manual processes can also be challenging for globally distributed or remote teams, where sending physical paperwork back and forth is not feasible.
The Advantages of Automated Purchase Order Approvals
Automated purchase order approval workflows can help address the challenges of manual processes. They can reduce the time it takes to approve purchase orders, eliminate data entry errors, and increase accountability. Automated workflows can also be scaled to manage a high volume of purchase orders. By automating repeatable tasks, businesses can increase efficiency and reduce the operational costs associated with manual processing.
Automated workflows also enable companies to optimize their procurement processes. By collecting and analyzing data, businesses can gain meaningful insights into their purchasing patterns. These insights can help companies reduce costs, enhance vendor relationships, and prevent inventory problems. Automated workflows can also provide a competitive edge by freeing up staff to focus on strategic tasks instead of mundane day-to-day activities.
Building an Automated Purchase Order Approval Workflow
Building an automated purchase order approval workflow involves six steps:
1. Analyze Your Current Purchase Order Process
To build an efficient automated workflow, it’s essential to understand your current purchase order process. Analyze your existing process to identify bottlenecks and inefficiencies. Look for steps that are unnecessary or repetitive, and keep an eye out for where approvals get stuck. Identify the approval points in the process and determine who needs to approve each purchase order.
2. Identify the Approval Points
Identify the approval points in your purchase order process. Determine who needs to approve each purchase order and at what point in the process. Consider whether your current approval process is efficient and effective. Look for ways to streamline the process, such as eliminating unnecessary approvals or adding more approvers to reduce bottlenecks.
3. Analyze Your Current Purchase Approval Process
Analyze your current purchase approval process to identify inefficiencies and bottlenecks. Determine what slows down the process and where errors occur. Consider where you could improve your approval process to make it more resistant to failure.
4. Set Goals and Metrics for Your New Workflow
Set goals and metrics to guide your new automated workflow. Determine what you want to improve and by how much. Decide whether you need to reduce costs, increase speed, or improve productivity. Develop measurement mechanisms to track your progress and help you identify areas for improvement.
5. Choose an Automation Software Solution
Choose an automation software solution that can help you build an efficient automated workflow. Look for software that offers automatic validation of data, automated routing, e-signature capabilities, automatic notifications and reminders, and mobile device access. Choose software that integrates with your existing systems and is easy to set up and use.
6. Measure and Improve the Process
Measure the impacts of your new automated workflow to identify areas for improvement. Determine whether the workflow runs faster, whether there are fewer mistakes in the pipeline, and whether you’re saving money on the process. Keep an eye out for where you could streamline the process even more.
What to Look for in Purchase Order Approval Software
When choosing purchase order approval software, look for the following features:
1. Workflow Automation
Choose software that automates your purchase order approval workflow from start to finish. Look for software that can automatically validate data, route approvals, and send notifications and reminders to approvers.
2. Customization
Choose software that can be customized to match your company’s processes. Look for software that can be easily configured with built-in formulas, alerts, and permissions.
3. Integration
Choose software that integrates with your existing systems. Look for software that can integrate with your accounting software, ERP system, or vendor management system.
4. Reporting and Analytics
Choose software that provides reporting and analytics capabilities. Look for software that can collect and analyze data to provide insights into your purchasing patterns.
5. Mobile Access
Choose software that provides mobile access. Look for software that can be accessed from any mobile device, so approvers can approve purchase orders on the go.
6. E-Signature Capabilities
Choose software that provides e-signature capabilities. Look for software that allows approvers to sign purchase orders electronically, so approvals can be completed quickly and easily.
Conclusion
Automating purchase order approvals can help streamline the procurement process, making it quicker, more accurate, and more cost-effective. Manual processing can be time-consuming and prone to errors, leading to missed deadlines, miscommunication, and lost orders. Automated workflows can provide meaningful insights into purchasing patterns, reduce costs, and enhance vendor relationships. When choosing purchase order approval software, look for workflow automation, customization, integration, reporting and analytics, mobile access, and e-signature capabilities. By automating purchase order approvals, businesses can optimize their procurement processes and gain a competitive edge.