Although the question of much manual purchases orders is a topic that regularly comes up in procurement, getting a clear answer to this question can be surprisingly hard to do. Since so many purchasing managers know that this process is costing their company a considerable amount of money but don’t have a concrete figure to point to, we thought it would be helpful to dive into this topic and provide some accurate calculations.
The Average Cost of Manual Purchase Orders
One of the reasons that many people don’t have a clear figure for their own company is because costs can vary quite a bit based on industry. Because it can be a challenge to nail down an exact cost, it’s helpful to have benchmarks from multiple sources and industries to use as comparison. In 2006, APCQ conducted a study which made the differences in costs between industries quite clear. The conclusion of this study was that depending on the industry, the cost of manual purchase orders can be anywhere between $35.88 and $506.52.
In 1994, the EPA pegged a conservative estimate of $94.20 per purchase order, with the caveat that this process can reach a cost of $300. Another source that has added data to the mix is the Supply Management Handbook. This guide explicitly states that not only can the administrative costs associated with a purchase order easily exceed $100, but it’s not uncommon for the total cost of manually processing a purchase order to top $200.
Last but not least is data from CAPS Research. This research found that in industrial manufacturing, every purchase order has an average cost of $59. This cost skyrockets all the way to $741 in the petroleum industry. And when everything is averaged out, the standard cost for a purchase order across industries is $217. It’s worth noting that since much of the research estimating costs was done a decade or more ago, the current costs of what was calculated back then will be noticeably higher.
PO Automation Will Save You Time and Money
Since there are very real costs associated with manually processing purchase orders, purchase order automation can help companies save a significant amount of money. While the total cost per purchase order varies by industry, purchase order automation has the ability to reduce that cost by up to 75% per invoice.
Although those significant savings are enough to get most businesses on board with PO automation, that’s just one of the benefits of Bellwether Purchasing Software can provide. Automating purchase order processing will also boost productivity, as well as ensure that your business is able to maximize its category spend. So if you’re ready for your business to start reaping all those benefits, learn more about all the features and benefits of Bellwether’s Purchasing Software, contact us today.
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