3 Easy Steps to Automate the Purchase Order System on Orderhive

The Orderhive inventory management system can help you simplify many of your inventory management tasks, including automating the purchase order system. In this article, we show you exactly how you can automate your purchase orders.

Automated purchase orders are essential to a modern inventory management system. Simply put, every business – manufacturing or retail – needs an automated order system to work efficiently. Creating manual purchase orders not only takes up your resources but also makes the process vulnerable to human and clerical errors. We will guide you on how you can automate the purchase order system on your Orderhive software in three easy steps. But let’s look at what purchase order automation is first.

A purchase order is an official document generated by a buyer and sent to the seller indicating the requisition of products or services along with the price, quantity, and description of goods agreed upon by both. It acts as an official contract for the purchase of goods/services. The buyer can confirm the order in writing for future reference by generating the purchase order. The following is a typical purchase order example:

• Manual order processing is more prone to calculation errors.
• Manual purchase order processing can lead to miscommunication and delay in communication among involved parties.
• It requires employees to invest more time and energy.
• It is less efficient than its automated counterpart.
• It requires more paperwork.
• It lacks visibility of the process.
• It invites security threats.

Purchase order automation is a process of using tools to automate the generation of purchase orders and approve them.

Imagine you own a convenience store and are responsible for purchases; you might be drowning in paperwork. A convenience store houses numerous items, and there are multiple suppliers for these products resulting in a plethora of purchase orders. If you had a way to automate the entire process, you would have plenty of time on your hands to plan the advancement of your business. Inventory management software, including Orderhive, can help you automate the entire process in a few easy steps.

Steps to automate your purchase order system on Orderhive

Step 1: Add the products to the product category

The first step towards automation is inputting your existing data into the system. When you want to automate the purchase order system, your software should be aware of all the products you need to buy at any point. Go to the products’ section to add the products. You can either add the products manually by clicking on the ‘New Product’ tab or import the data from a file stored on your computer.

The product section allows you to input the stock threshold for each item. When your stock reaches the threshold limit, you will receive an alert. A stock threshold is the minimum quantity of a product you will need to carry on your business smoothly until you receive additional supplies.

Step 2: Add automation trigger

The next step is to add the type of automation you need. Orderhive allows you to customize your automations. You can either use one of the built-in triggers or create your personal trigger. The following screenshot shows the custom trigger created for the stock threshold:

A trigger is a predefined condition that kickstarts an automated workflow. Therefore, when the trigger condition is fulfilled, the system automatically switches on the resulting workflow. On Orderhive, this trigger can be anything you require, including:

• Stock reaches zero or the threshold,
• A particular item is sold,
• A comment is received on a particular order,
• Shipping bill is created,
• Product stock is updated,
• Product sale is canceled, or
• Item is returned.

This list is an example of the triggers you can create. In practical life, you can come up with your own conditions that can trigger an entire workflow.

Step 3: Add an automation workflow

Once you have added the trigger, you can use it to set the automation. You can add a condition in the “If” section. You can add consequences if the condition is followed or not. The following screenshot will make the concept clearer.

In this example, we have used the trigger “Stock threshold reached.” If the item stock in the warehouse reaches the threshold, then the software will create a purchase order. No action will be taken until the stock reaches the threshold.

You can also automate the software to send emails to your supplier for reorders. However, for sending out reorder emails, you should have predefined:

• Supplier,
• Price,
• Quantity,
• Quality, and
• Threshold.

You can choose to have different data points set for different products. Consequently, going back to our convenience store example, you can set a threshold for a shampoo with its predefined supplier, price, and quantity, and a different set of data for cookies, and so on.

Any kind of automation reduces errors and increases the speed of processing. Let’s explore some of the benefits provided by purchase order automation:

Cost cutting

Every business has maximization of profit as one of its objectives. Higher yields can facilitate growth, increase employee satisfaction, and provide better working conditions for the organization. Therefore, you want to save money whenever you can. Although automation might seem pricey initially, if we consider the long-term financial benefits, it certainly proves to be worthwhile. In the long run, an organization can save on the following fronts:

• Loss due to errors and omissions,
• Loss due to miscommunications,
• Production delay cost resulting from stockouts,
• Administrative expenses, and
• Overstocking expenses due to human errors.

Consistency

According to a survey by OnePoll, a part of the SwnsDigital, 70% of the people found reading their co-workers’ handwriting difficult. In fact, 45% of the subjects found it hard to read their own writing. So much for handwritten words! A manual purchase order can be misread by your co-workers or even yourself. These statistics are enough to prove the importance of purchase order automation.

Even if you print your purchase orders, human errors can seep in. If there are any issues in entering the data into the system, a series of errors will follow. These errors can dent the company’s financials and reputation.

On the contrary, if the purchase order system is fully automated, there are hardly any chances of mistakes. This will result in consistent management.

Flexibility

Flexibility is the feature you should aim for when your organization grows. When you have a handful of employees, it is easy to keep track of tasks, but with numerous employees, the management becomes more complex. The automated purchase order system helps you to cut down the number of employees involved in the ordering process. With a smaller fleet of people, your company can achieve a greater amount of flexibility as the management can direct them in a straightforward manner. Moreover, any changes in reorder levels can be done by the managers at a click of a button on the automated purchase order system. They can also choose to prepone or postpone the orders easily and efficiently.

Efficiency

There are two types of inventory abnormalities that damage the company financially and otherwise – overstocking and understocking. Duplicate orders by different employees can lead to overstocking goods, while understocking can result from not placing timely orders.

In case of overstocking, the company faces increased overhead to maintain the stock. Additionally, the investment in stock can reduce the capital that could have been used for other purposes. On the other hand, understocking can also break the production process, resulting in damages. For example, in manufacturing, there must be an uninterrupted supply of raw materials. If the raw materials are understocked, there is a risk of stockout during production leading to a halt in the process.

Automating your inventory management, especially your purchase orders, can help you manage a specific level of stock for all the items in your inventory with relative ease.

Clarity

An automated purchase order system gives you a real-time view of all your information, giving you the ability to make the right decisions at the right time.

Instead of looking for a manual purchase order prepared by an employee and trying to decipher their handwriting, you have a direct view of the list of purchase orders in your system. This helps you plan your capital movement, supply chain management, and profitability analysis.

Orderhive also provides easy-to-use analytical tools, including reports, charts, and graphs for data visualization. Some of the purchase reports include:

• Purchase summary report,
• Purchase by the supplier,
• Purchase by the product,
• Product average purchase price report, and
• Purchase summary extended report.

Maintaining your inventory manually can not only be a hassle but also have financial repercussions. Automating your inventory management system has numerous benefits, including speed, consistency, efficiency, and accuracy.

Automating the purchase order system on Orderhive is a simple process that can be completed in just three steps. Once you have entered the rules into your system, you will be free to pursue higher-value activities for your organization instead of clerical tasks.

Click here to book your demo of the Cin7 Orderhive software for efficient inventory management.