How Purchase Orders Work for Companies of All Sizes
Purchase orders are very much like clothing: one size does not fit all. But whether a company is a small startup, a mid-size enterprise or a large corporation, purchase orders are vital to their operations. As long as they’re tailored to your organization’s structure, objectives and size, purchase orders can not only make tasks more effortless and accurate, but can help you become more successful.
Firms with 25 employees or fewer often treat procurement as part of another employee’s job. Usually someone in accounting takes on this responsibility, which is ideal if the volume of activity isn’t too much for them to handle. Small companies don’t normally require purchase orders with all the bells and whistles; just the basics are needed. Use purchase orders that are designed for simplicity so that personnel can concentrate on other tasks rather than spending tons of time filling them out.
While some businesses might be satisfied with hard-copy purchase orders, more proactive owners realize the need for electronic forms. By using software to keep track of purchasing information, you’ll be better able to calculate the total costs of orders, assess company performance and create budgets and financial reports. Even if you can only task one person in the entire organization to do this, designate someone to install and maintain this software. A few minutes of your time now will save you hours of effort at the end of the quarter.
Supply chain management is given more consideration in companies that employ 25 to 100 staff members. In these companies, one person is usually responsible for procurement and only needs owner approval to make purchases. Establishing a person to exclusively handle all the buying for the company is advantageous in that it keeps the whole procurement process streamlined. What’s more, there’s little chance of duplicate orders, especially if the list of suppliers is consistent over time.
Purchase orders allow your workers to work faster and more efficiently so that they can free up time to handle special orders, focus on issues surrounding delivery and find suppliers that offer competitive prices. The one disadvantage of this type of setup is the lack of checks and balances to reduce inaccurate orders or misuse of systems. This can be problematic, especially if the procurement agent answers to no one else in the company except the owner. But if a purchase order is easy to read and understand, with all the necessary information at the boss’s fingertips, top-level decision-making can be executed in seconds.
In organizations that employ more than 100 people, procurement deserves more detailed attention. Usually you have a team or even a department responsible for filling out and keeping track of purchase orders. Beyond simply ordering products, electronic purchase orders can help your team make projections, track inventory, consolidate vendor information and manage special orders and international transactions. The whole process can be complicated, but with the appropriate system, managing your company’s purchasing can be easy.
A more consolidated purchase order system also allows for greater communication between management and staff so you can avoid any duplication and mitigate inaccuracies that may otherwise fly under the radar. This type of system can also provide all the necessary data for budgets, statements, performance charts and other documents needed by decision makers. Incredible amounts of data can be processed in seconds, which will save your team significant time when they’re creating reports.
Regardless of how elaborate your purchase orders are, they should all have a number of things in common. First, they’re designed for simplicity so that both smaller operations and larger companies can review their status in seconds. Second, they’re far more accurate than their paper counterparts, eliminating the potential for miscalculations. And third, they’re easy to complete so workflow is made more efficient. Whether you’re in a small, mid-sized or large company, make sure to find the purchase order system that works best for you.