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Inventory and Purchase Order Software Increases Procurement Efficiency

The business structure continues to evolve, making inventory management and procurement much more important. Procurement is related to many business activities and is one of the main daily tasks that must be completed correctly.

While inventory and procurement may seem like simple tasks to an outsider, business owners know that they still pose many challenges. However, those challenges can be reduced or eliminated by utilizing effective inventory and purchase order software.

Common Procurement Problems

Manual Processes

Many businesses are still using manual processes for their procurement function. Using spreadsheets and paperwork complicates the process and can lead to a multitude of mistakes.

Human Error

To err is human, but errors in the procurement process can be detrimental for a business. They can lead to unnecessary spending and also cause problems with valuable suppliers.


Approvals are one aspect of the procurement process where workflows begin to break down. Human workers and management get busy and can’t always take the time to approve purchases on a daily basis.

Unreliable Suppliers

Your business will always need suppliers who can fulfill your product criteria. Often, businesses lack a list of suppliers that can help them get the right inventory, and build valuable relationships.

Going Over Budget

You may end up going over budget if you wait until the last minute to make purchases. You can also go over budget by purchasing products you don’t need because your purchasing function isn’t effective. Ordering excess stock will continue to push your costs.

Each and every one of these issues can easily arise due to a lack of automation.

How Purchasing and Inventory Software Increases Efficiencies

Robust, user-friendly procurement software will offer features that improve the procurement function’s efficiency.

Monitor Inventory Lifecycle 

For inventory control, it’s necessary to have appropriate management strategies. You need to make sure that you can restock the items on time so your operations don’t face a delay.

Inventory software allows you to run lifecycle management practices. These practices will help you get an idea of the life of inventory. They also let you know when something needs to be replaced.

You never want a worker to reach for something that isn’t there. Inventory management software allows you to uncover when you’ll need to reorder particular inventory items, often before they’re depleted.

Record Usage History

Usage history will allow you to predict future consumption of inventory. As your business grows, you may need to change your inventory portfolios and budgets. A cloud-based system can record the usage history of your products, tools, and machines. This allows you to build upon the current usage and forecast your future demands accurately.

Effective Supplier Management

Optimizing your procurement function means having a robust supplier management system. You can store all your supplier information using e-procurement software with a database that allows you to easily record and retrieve important supplier information and contract terms.

Automate Purchase Orders

If you have your suppliers’ information recorded in a procurement software system, you can easily generate a purchase order at any time, with minimal effort.

Optimizing Purchase Order Cycle Time

Increasing procurement efficiencies means taking a daily task and making it simpler and simultaneously more effective. One of the best ways to increase purchase efficiencies is to optimize the purchase order cycle time.

Benefits of Efficient Purchase Order Cycle

The procurement cycle is the total time a transaction takes from the requisition to the delivery and payment in full. This cycle time is a key performance indicator (KPI) that can be used to measure the productivity and efficiency of your procurement function.

The KPI measures the average amount of time it takes for a requisition to generate a purchase order and send it to the supplier. Reducing the PO cycle time will lower the immediate expenses for every purchase while reducing the cost of the procurement function itself.

Manual Purchase Order Cycle

To optimize the PO cycle, you must first understand its workflow. While your company may be unique and different from all of the rest, the average PO cycle follows this path:

Step 1: Generating a Purchase Order

A member of the procurement team will generate a purchase order after the requisition is approved.

Step 2: Approvals

The finance department will then review the budget for the requested items and ensure that funds are available. Procurement staff may also send requests for proposals to potential suppliers for them to submit quotes.

Step 3: Supplier Review

The procurement team reviews and compares the bids and confirm the winning bid with stakeholders.

Step 4: PO Submission

The purchasing department may negotiate with the supplier for terms, price, and quality of goods. Afterward, procurement sends the purchase order to the supplier, and it becomes a legally binding contract between the two parties.

Step 5: Review of Deliveries

Once items are delivered, the procurement team reviews the items against the terms before sending payment to the supplier.

Automation: The Key to Optimizing Purchase Order Cycle Time

Automation streamlines your purchase order cycle time and the purchasing process as a whole. As your business grows and expands, procurement can become complex and demand more resources, more time, and additional talent. 

Cloud-based procurement software solutions use automation to trim time, expenses, and stress from your procurement department. The benefits are primarily from the reduction of human error along with increased efficiency. Thanks to simplicity and productivity, staff can dedicate their time to more valuable tasks.

Businesses who switch from manual to automated processes can decrease hours or even days from the purchase order cycle. Automation can remove roadblocks and streamline the entire procurement process.

Automation also cross-connects all transactional data with related documentation. Each PO is automatically matched with its corresponding invoice, shipping documents, correspondence, and profile information, including the contract terms.

Saving Money With Procurement Efficiencies

When you increase the efficiency of any part of your business, you are going to save money. Efficiency equates to cost savings because you are reducing the number of hours needed to complete a task. Not only that, but when you reduce or eliminate human error, you can further decrease unnecessary spending.

Want to know how much money your business can save by switching to an automated procurement system? Check out our ROI Calculator right now. Using basic information from your procurement process, we can easily calculate and show you just how much money your business can save.

September 23, 2019
BY Bliss Team

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