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Tag Archives: purchase order

Benefits of “2-Way” Purchase Order Processing

There are many ways to automate your Purchase Order processing. Often people look to solutions that add automatic faxing or emailing capability to your purchasing system. While these solutions do remove the need to manually print and send your purchase orders to your suppliers, the process stops once the purchase order is sent. There is no provision for the management of the purchase orders outside of your organization or the processing of information coming back from your suppliers.

In this article, I will review some of the benefits that you can realize by using a proper “2-way” communication system such as the B2B Connex Supplier Portal. An on-line supplier portal not only displays the purchase order detail, but also provides the ability for the supplier to make change requests or attach additional information by accessing your system using a browser.

Automatic Expediting

How often have you lost track of the status of a purchase order that you have sent to a supplier? When an order is faxed or emailed, there is no way to ensure that the supplier has received it without a manual follow-up. When a delivery is late, you may find out by running report from your ERP system, but again, any expediting would be done manually.

With a “2-way” communication system, your suppliers would enter their order confirmations electronically when they receive their orders. Any order that hasn’t been confirmed within a few days would be flagged by the system and expedited electronically. There is no way that an order could “slip through the cracks”. In a similar way, orders that are not fully received or shipped by the required date would be flagged and expedited by the system without any manual intervention.

Delivery Date Confirmation

With a “2-way” communication system, suppliers are asked to confirm delivery dates with their electronic order confirmation. They are also given the opportunity to inform you of changes to those delivery dates right up to the time of shipment.

While changes to delivery dates for an order are never desirable, providing a means of tracking the changes and updating your ERP system electronically will lead to more accurate production and maintenance schedules.

Price Change Requests

Similar to delivery dates, your suppliers can be given the opportunity to confirm the prices on a purchase order at the time of order confirmation. In fact, when done electronically, an acceptance of a purchase order by your supplier is their guarantee that the price is correct. If it is not correct, they have the ability to request a new price when confirming the order rather than waiting until it is time for the invoice.

This means that there should never be a difference in the price on a purchase order and its related invoice. This can eliminate invoice match problems. Also, by managing this process electronically, you never have to worry that price changes negotiated verbally or by email will be lost before they are entered into your ERP system.

Evaluated Receipt Settlement (ERS)

Once you have eliminated invoice match problems, you could be ready for the next step – Evaluated Receipt Settlement.

ERS is the process of auto-generating supplier invoices within your ERP system based on the quantity of received goods and the purchase order price. This can only be done if you are sure that the purchase order prices are correct. Once the invoices are auto-generated they can be sent for payment without requiring that your supplier send you an invoice. This eliminates all of the manual tasks of receiving invoices and entering them into your system. It also removes the need for your supplier to create and send their invoices to you.

By admin | Posted in Purchasing | Tagged , , | Comments (1)