Corporate Purchase Order Automation – Best Practices

Corporate Purchase Order Automation – Best Practices 1920 1280 Xcelpros Team


Chemical company purchasing focuses on boosting profits through a simple chain of obtaining required materials and services. In today’s rapidly moving digital world, purchasing requires a comprehensive strategy that can adapt rapidly changing conditions.

Is your company still using manual archaic systems to manage purchase orders? An antiquated purchasing process can easily lead to mismanagement and simple user errors, reducing your profits.

Times, however, have changed. Using a technology-driven approach that automates the entire supply chain and includes real-time supplier collaboration saves time and money. These systems increase efficiency while boosting profitability.

Figure: 1 Integrating the Purchase Order Process

Integrating the Purchase Order Process

Companies using software tools lacking a common design and style, especially those made 3rd-parties, are looking to cause data errors. Having a common suite of tools for daily use that can share information goes a long way to reduce errors and improve efficiency.

For example, connected business solutions from Microsoft help streamline internal processes. They automate repetitive tasks so your people don’t have to.


of companies agreed that there are loopholes in their PO practices.


of organizations reported having plans for addressing purchase order management inefficiencies in the near future.

Source : A survey of Finance Personnel, 2017

Figure: 2 The Purchase Order Lifecycle

The Purchase Order Lifecycle

Procurement and the Purchase Order Life Cycle

Buying raw materials and finished components starts with negotiating terms and then acquiring goods or services from approved vendors. It also requires establishing payment terms and evaluating suppliers based on past transactions. Other steps are sending purchase orders, receiving purchased goods and processing invoices and payments.

The purchase order lifecycle has six core steps:

1.Vendor Selection: After receiving supplier quotations, buyers shortlist the ones meeting company requirements and budgets. While that happens, the procurement team verifies the supplier’s integrity, taking stakeholder input to reach a unified decision on which suppliers to use.

2.Negotiation and PO Dispatch: Buyers and suppliers negotiate the delivery timeline, set on time in full (OTIF) key performance indicators (KPI), establish a payment process, agree on quality standards, dispute resolutions, confidentiality, risks, change in requirements and other details. Suppliers and buyers sign purchase contracts, locking in the price and other terms.

3.Purchase Order Creation: Once the procurement team receives approval on purchase requests, it creates a purchase order containing product details, pricing, delivery terms, freight methods and other details. When dealing with multiple line items, some buyers’ systems may create purchase orders for each item.

4.Receiving goods and quality checks: Vendors send shipments according to the buyer’s instructions and terms in the PO. After receiving the supplier’s shipment, the buyer conducts a standard quality check, confirming it matches the PO’s requirements and packing slip. The receiving clerk verifies the item count is correct and conducts a surface level check for damages, noting any errors or damage. When the shipper and receiver numbers and quality levels do not match, relevant parties are provided details on what was found. After disputes are resolved, the receiver records the receiving information into the inventory management system.

5.Processing invoice payments: The supplier invoices the company, which routes it to the Accounts Payable(AP) Department. An AP clerk inputs the invoice, verifies details and charges against the PO and posts the PO or invoice. The transaction creates an open invoice against the supplier in the system. The open invoice now appears on an aging report.

6.Processing the payment for the purchase: As the invoice due date approaches, an AP clerk prepares a payment proposal that follows a standardized company workflow. Approval typically depends on the invoice amounts with higher figures requiring higher-level executive approvals. After getting approval, another AP clerk prints checks or sends electronic payments before posting the payment and clearing the open invoice.

What do these steps tell modern businesses? Each overly-simplified step shows that being detail oriented is a primary requirement. Anything that reduces human error and improves the overall accuracy of the purchase-to-pay lifecycle must be considered.

Small companies may skip the PO process, relying on strong relationships with only a few vendors. When verbal deals break down into a battle of “he said, she said,” the result is often an unnecessary legal battle. Having an automated written process keeps everything documented, safeguarding your company from potential losses.

Underlying Reasons for a Purchase Order Failure

There are plenty of reasons, including human error or process failure, why a purchase order system can fail. Some of the reasons are:

  • Authorization limitations

    In most cases, only an authorized person should sign a purchase order, obligating the company to pay it. Situations may arise when the authorized agent doesn’t receive the PO or forgets to complete the sign-off. In such cases, Accounts Payable may refuse to accept the invoice.

  • Using wrong codes and supplier names

    The person assigned to complete the purchase may lack crucial details such as the full supplier name and business code. Incomplete or inaccurate forms wastes time and money.

  • Not completing all essential columns and boxes

    When handling POs manually, there are no system reminders to fill in every mandatory data field. Missing data in one field can have a domino effect on other areas.

  • Failing to use the preferred suppliers’ list

    In an automated PO management system, a preferred supplier list is given preference. It forces the buyer to stick to what is listed. Choosing suppliers outside the approved list requires providing an explanation to management, even when the altered decision benefits the company. Automated systems often have a trigger, requiring management approval before the PO progresses. Manual processes are challenged to monitor approved supplier checks.

  • Delivery Delays

    One of the apparent problems faced in manual Purchase order processing is enhanced visibility in delays of goods/ services delivery. Typically, a high volume of orders or errors results in the supply system slowing down or losing track of vendor shipments.

Automation as a Solution

While digitizing purchase orders requires a significant initial investment, it’s a long-term solution resulting in a tangible return on investment. The sooner a company upgrades to automated electronic invoicing solutions through enterprise resource planning (ERP) software, the faster it sees the benefits. Producing electronic POs in an older ERP removes paper but doesn’t end manual processes. Buyers still need to extract the PO from the ERP and email it to the supplier.

Having an automated PO system that easily fits your business requirements makes purchasing more efficient. It should have features such as automatic purchase order creation and approval routing. It should notify suppliers via email or through an alert triggered in an online supplier portal.

When your advanced ERP—like Microsoft Dynamics 365—has an online supplier portal, your vendors can receive purchase orders, make modifications, send order acknowledgments and generate accurate invoices.

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5 Steps to Creating an Automated PO System

There are five steps required to create an automated PO system:

  1. 1.Integrating the purchase order system with ERP
  2. 2.Creating an electronic PO requisition and approval process
  3. 3.Transmitting electronic purchase orders to suppliers
  4. 4.Providing suppliers with easy online access to view your POs, acknowledge orders, and send advance shipment notices (ASNs) instantly
  5. 5.Streamlining supplier transactions to help manage your purchase-to-pay process

Key Benefits of Automating Purchase Order Process

Chemical and pharmaceutical companies plus their suppliers gain several benefits from using an automated purchase order system. These benefits include:

Providing suppliers with 360-degree views of orders, invoices and payments

PO requisitions automatically route for approval

Increasing invoice accuracy and reducing duplicate data entry

Saving time and resources while making users more compliant

Minimizing inconsistencies and reducing opportunities for error

Streamlining the entire PO process, promoting faster speed and better efficiency

Enhancing productivity by managing multiple orders simultaneously

Reducing long-term expenses

Streamlining inventory management and improving decision-making capabilities

Figure 3 Upgrading to an Automated PO System

Improving Supplier Interactions with Dynamics 365

Dynamics 365 works with Microsoft Office 365 to simplify and automate daily tasks, letting your procurement team focus on managing purchases.

For example: Your buyer receives an email from a supplier requesting additional details on a quote. The system recognizes the sender, enabling the buyer to easily pull up prospect cards within Outlook. From this dashboard, the buyer reviews the account that includes the supplier’s existing quotes, ongoing orders and purchase history. While the buyer manages the quote, supplier and product information auto-populate, helping him get it done faster.

Another example is while your buyer is sending a purchase requisition, a message is sent to their inbox from a potential supplier they recently interacted with at an event. The system recognizes the supplier’s email address is not in the supplier database, prompting the buyer to add it. Without leaving Outlook, the buyer creates a profile in Dynamics 365 Finance.

Both of these examples show how automation reduces time spent on administrative tasks, allowing your purchasing team to quickly respond to quotes and ultimately improving overall customer service.

As a business owner, imagine receiving an email from a high-priority customer needing an order delivered fairly quickly. Fulfilling that order depends on receiving materials from your suppliers. Without leaving your inbox, you can check inventory and discover that you don’t have enough stock on hand to fulfill the order. Your sales team can quickly send a PO directly to the Buyer with “approval to proceed.” In the same interface you create and send a purchase order to the vendor and a quote to your customer.

With Dynamics 365 and Office 365 working together, you can take quick action right from your email – allowing you to spend more time managing your business and connecting with customers.

Key Takeaways

Efficient purchase order automation increases the point of revenue, makes the operational process easier and reduces error rates.

The mature and robust functionality of an automated purchase order system ensures better functioning of the Purchasing department, with a cloud-based procurement solution offering greater transparency on purchase order management with even greater ease of access.

CONTACT US and get started with your Purchase Order automation process using Power package with Microsoft Dynamics 365 Supply Chain!

About XcelPros

XcelPros is a Chicago-based company delivering transformation through technology. We offer business and technology solutions with deep industry experience in Chemical, Pharma, Life Sciences (including Medical Devices, Bio-Medical & Biotech), Insurance, Discrete Manufacturing, Process Manufacturing, Distribution and Food & Beverage.

XcelPros is a Microsoft Gold Partner, Direct Cloud Solutions Provider (CSP) and a Systems Integrator (SI) offering software licensing, implementation and consulting services for Microsoft Dynamics 365, CRM, Microsoft Dynamics AX, Business Intelligence & Analytics (Power BI), SharePoint, Office 365 and Azure (Cloud, IOT, Microsoft Flow amongst many others).

Our mission is to provide integrated technology solutions that amplify impact and empower our customer’s businesses. We believe technology is the key enabler of exponential growth for us and our customers.

Contact XcelPros today to transform your business.

Call us toll-free – 1.855.411.0585 (or) visit

Maintaining an Integrated Supply Chain: Key Solutions

Maintaining an Integrated Supply Chain: Key Solutions 1280 720 Xcelpros Team

At a Glance

  • Many organizations that fail to recognize supply chain as a strategic business function, tend to not move to a digital supply chain and lose out on the benefits that come with the transformation.
  • Traditionally, manufacturing companies have treated supply chain as a transactional function, a bargaining chip to reduce price and secure on-time delivery of raw materials. The modern supply chain is viewed as a strategic asset to the organization, integrated deeply with other business functions, aimed to increase customer satisfaction.
  • Companies unable to track hidden costs across the supply chain lose track of actual costs, damaging their bottom line. Proper supply chain monitoring can save anywhere from 20-30% of distribution costs.

The Supply Chain Challenge

Supply chain management is one of the most critical elements of success for any business in today’s global market. However, its application is undermined by many companies as business leaders face challenges to control the cost of a supply chain without compromising on its efficiency. Since COVID-19 we have witnessed drastic changes in methods and methodologies for streamlining supply chain operations. It, however, doesn’t take away some key fundamentals required for healthy functioning of a company’s supply chain and inventory management.

According to the Logistics Bureau, for companies running global operations, their supply chain cost could rise as high as 90% of their total expenditure.

The Supply Chain Slowdown

The problem lies in poor strategic management. Supply chain managers are focusing on cost minimization, most of them without having detailed field knowledge of how the system works, and the result is it is impacting other areas of the process such as inventory optimization, ‘on-time delivery in full (OTDIF)’ and customer satisfaction. Trying to improve one KPI is resulting in a cost spike in other areas of operations, which can have a long-term impact on revenue.

FIGURE 1 Where Business Leaders are Falling Short

A robust supply chain needs strategic alignment and planning in line with the overall business functioning. For example, in order to control cost, you need to first understand the key drivers of cost in the supply chain and most importantly how to measure the supply chain cost. While the strategy is important, establishing an integrated supply chain requires a synchronized approach to planning, execution, and application of technologies in order to create an end-to-end unified system across the entire organization.

FIGURE 2 Key Elements of an Integrated Supply Chain

In this article, we will touch upon some interesting facts that make an appealing case as to why the Supply Chain strategy needs to be digitally enhanced and properly integrated with other parts of the business.

Switching from Traditional to Next-Gen Digital Supply Chain

The rapidly evolving business landscape is disrupting the way companies function. Moreover, the advent of the latest technologies and growing competitive markets are driving companies to push their limits and redefine supply chain operations.

Is your business ready to embrace a digital supply chain as a key distinguishing factor for its competitive advantage?

Most SMBs are holding back the transformation due to the fear of possible risks that could surface. Per our industry experience, it’s due to the age-old perspective in which company leadership is analyzing their supply chain. In most of the cases, we found that they are way behind the entire purview and don’t realize the true potential of a well-integrated, technologically advanced supply chain.

Traditionally, business leaders focused on pricing and product quality, but priorities today have completely shifted. Major Objectives and Key results of organizations are geared towards optimized supply chain and operations to boost businesses forward. With Industry 4.0, advanced analytics, and robotic process automation rising, companies are realizing the need for an integrated supply chain. This has become even more true as the Covid-19 crisis continues. Demand planning and fulfillment, supplier-customer relationship, customer retention, on-time delivery are some of the major expenses of a company. An efficient supply chain not only helps with cost reduction in these segments but also ensures growth, profitability, and customer satisfaction.

Top Reasons to Upgrade Your Operations with a Next-Gen Digital Supply Chain:

Shifting from a plant-level production planning to a demand-driven focus with customer-centric mindset but not compromising with the product quality

Getting rid of outdated processes and technology to match the transforming global business landscape

Reducing cost to formulate a more efficient value chain to remain cost-competitive in the market

Ability to outsource parts of your supply chain process in order to reap economic benefits and superior supply chain network design

Achieving more efficient product lifecycle management

Collaboration with stakeholders to integrate business processes for increasing visibility throughout the value chain

The Impact of Supply Chains

An integrated supply chain influences the overall functioning and improves profitability of the business. Going digital and increasing interoperability across these functions sets a business up to accelerated growth. Let us discuss a couple of key areas that are impacted by a well designed supply chain.

FIGURE 3 Upgrading the supply chain will improve your bottom line

01. Supply Chain and its Impact on Customer-Centricity

When business leaders discuss improving their supply chain, their main focus is usually related to accelerating growth by cutting down costs, achieving better lead time, and ensuring on-time delivery; as all these factors contribute towards business development. What slips from their mind is what customers really care about. It all starts and ends with customer satisfaction. Delivering the right product at the right time improves your organization’s brand value and credibility to customers.

What the customer cares about is receiving quality products on the promised delivery date without having to spend too much time or effort. This can be seen in Amazon’s announcement of one-day delivery. Late and inaccurate deliveries bear a significant impact on customer loyalty.


of industry professionals predict that their supply chain is going to be a key driver of improved customer satisfaction by the end of the year.

Source: Accenture

Your procurement division must understand the importance of cost-saving, but they need to be in line with the expectations of the customers and procure quality raw material for manufacturing the items. If expectations on raw material quality is not set, you could save money purchasing raw materials upfront, but end up spending more in the long run.

Let’s take a look at Kimberly-Clark’s journey to understand this better:

Kimberly-Clark is a manufacturing-focused organization that up to a few years ago did not have a supply chain division. Sandra MacQuillan, their first Supply Chain Officer, built a solid team to ensure the supply chain was focused on customer satisfaction. In the process, she integrated various functions such as procurement, quality (know more on quality management by clicking here), logistics, manufacturing, safety, etc. that are interconnected and delivered for one common goal – that is customer satisfaction.

Kimberly-Clark was able to achieve 25-30% cost savings by interconnecting various aspects of the Supply Chain, focused on better customer service, resulting in improved efficiency.

If you connect with the issues faced by Kimberly-Clark, or your supply chain is functioning in silos, it could be the best time to make a change. You can take this opportunity to update and integrate your supply chain with overall business functions and work towards a common goal like customer Satisfaction. A strongly integrated application will have the ability to incorporate holistic business functions including analytics, collaboration with notification, secure information sharing, control-based decision making using Artificial Intelligence, and more.

FIGURE 4 KPIs that are critical for supply chain monitoring

02. The Role of supply chain in sustaining business long term

According to the Logistics Bureau, nearly 50% of companies shut down within the first five years of operation. One critical factor contributing to these failures is an inefficient and poorly conceived supply chain. Supply chains in most organizations have evolved as a practice, rather than a well-designed process.


of companies with robust and high-performing supply chains are able to outperform their average peers in terms of higher revenue growth. This fact signifies the positive implication of a connected supply chain for a business.

Source: Deloitte

5 Steps to Integrate your Supply Chain

Break down organizational silos

For an effective, integrated approach to Supply Chain Management (SCM) the organization must operate end-to-end as a unified entity.


Define organizational objectives

Move beyond basic business and functional unit design and metrics. Look at the organization holistically and define the objectives as a complete entity.


Align business processes

Take a cross-functional approach to business process design. Start at a high level and map out the supply-chain flow with the goal of creating an end-to-end mapping of the business process.


Design the IT architecture to support an integrated approach

Leverage a cross-functional approach to IT systems design. As much as possible, standardize the organization in terms of the applications that are used. Seek to eliminate as many disparate applications as possible in favor of a common set of applications across the business.


Reshape leadership and culture

For most organizations, the major roadblock in delivering an integrated approach to supply-chain management is culture change. Change of this magnitude must be driven by solid leadership. There should be strong collaboration to drive the effort to deliver an integrated supply-chain organization.


Final Thoughts

There is no way the importance of an integrated Supply Chain should be overstated or undermined. If you or your organization have not prioritized your supply chain efforts, it’s never too late to take the first step.

An intelligent ERP software comes with a holistic supply chain module along with advanced analytics to support the following functionality.

  • A manufacturing execution system
  • Financial and cost accounting
  • Inventory and warehouse management
  • Purchasing and planning of materials
  • Product information management
  • Sales and marketing of the products
  • Transportation and logistics management

In order to push a company forward especially post-COVID-19, a sound digital supply chain strategy would be needed.

Do not let operational inefficiencies limit your business, long-term goals

Act Now

About XcelPros

XcelPros is a Chicago-based company delivering transformation through technology. We offer business and technology solutions with deep industry experience in Chemical, Pharma, Life Sciences (including Medical Devices, Bio-Medical & Biotech), Insurance, Discrete Manufacturing, Process Manufacturing, Distribution and Food & Beverage.

XcelPros is a Microsoft Gold Partner, Direct Cloud Solutions Provider (CSP) and a Systems Integrator (SI) offering software licensing, implementation and consulting services for Microsoft Dynamics 365, CRM, Microsoft Dynamics AX, Business Intelligence & Analytics (Power BI), SharePoint, Office 365 and Azure (Cloud, IOT, Microsoft Flow amongst many others).

Our mission is to provide integrated technology solutions that amplify impact and empower our customer’s businesses. We believe technology is the key enabler of exponential growth for us and our customers.

Contact XcelPros today to transform your business.

Call us toll-free – 1.855.411.0585 (or) visit