If you’re looking to make your business more efficient, you might need to revamp some processes. Of course, there are big processes in a business that take lots of time and effort to overhaul. Rather, how about spending some time focusing on some of the little processes such as reducing your purchase order cycle time.
A purchase order cycle is the journey of steps that a purchase order goes through when it’s being processed. It starts off with an approved purchase requisition. Then it turns into a brand new purchase order and goes to the purchase order approval process. There are a series of steps that ensure budgets are aligned, that purchase orders match and everything is finalised through the closure process.
However, there are a lot of aspects of a business that can hinder the purchase order cycle time. If your business uses antiquated tools, old software, or has a track record of poor internal communication, it could increase your purchase order cycle time.
How to decrease your purchase order cycle time
Use the right software
Use technology to take your purchase order cycle time to a more efficient level. Align it with other systems in your business and allow it to communicate throughout the journey. Use a procurement software to optimise your purchase order cycle workflow, keep a record of everything electronically and get rid of the paper trail. You can set it up to communicate with your online inventory management system so you can have transparency over the course of the order. An online inventory management system that talks to your procurement software so it can help decrease human mistakes and keep data up-to-date. This benefits the warehouse floor and the procurement team. In addition, an online inventory management system can automate some of the re-ordering and take some time off the procurement team’s hands. When information about the purchase order is automated, it provides a level of assurance and transparency as parties can see all of the related documentation. This includes the invoice, shipping information, any email correspondence, and other relevant transactional data.Decrease the number of suppliers
Look to reduce the number of suppliers you use and focus on the most preferred, critical suppliers. If you focus on a few relationships with suppliers, you can negotiate better deals, whether it be through cost reduction or quicker shipments. By reducing the number of suppliers you interact with, you’ll spend less time with the nitty-gritty details of each order with every different supplier. Instead, the process will be simplified and run smoother because it will be a familiar cycle.Keep your quality suppliers
When you decrease suppliers, make sure you’re keeping the right ones. How do you know how to differentiate? Poor performing suppliers should be out of the mix from the beginning. Then look at suppliers who are innovative and willing to go a few extra steps to get things done. Not only does the quality of their product need to be high, but their level of customer service needs to be high as well. Don’t waste your time working with poor suppliers. Get a few, high-quality suppliers on board and you’ll be on your way to reducing your purchase order cycle time.