case study purchase order automation

Case Study: Ferrari North America

Providing the IT expertise needed to develop a highly effective application for purchase order workflow automation

About the customer

Ferrari North America in Englewood Cliffs, New Jersey oversees importation, distribution and sales of new and pre-owned Ferrari automobiles in the United States, Canada and Mexico. They host high-profile motorsports events such as the American Le Mans and Ferrari Challenge series. In addition, the Ferrari Club of America is the largest Ferrari club today with 6,000 members.

"From a development standpoint, Ricoh really understood what we needed. They also understood what we didn't need because we weren't going to be using this application for the next 10 years." Scott Grissom Chief Financial Officer Ferrari North America, Englewood Cliffs, N.J.

Slow, manual, inefficient purchase order process

Lacked visibility into purchase order request workflow

New automation technology planned — but months down the road

The purchasing process at Ferrari North America was a little less than a well-oiled machine. Various operating groups procured products and services without automated technology to issue, route and approve purchase orders. With a formal solution from their Italian headquarters too far off, Ferrari wanted an immediate way to automate their purchase order workflow.

Having previously worked with Ricoh, for application support and SharePoint® expertise, we were the natural go-to partner to develop a interim solution that leveraged Ferrari's existing SharePoint intranet portal.

"If you're looking for a specialized module for some functionality that you've been missing, I'd recommend enlisting the expertise of Ricoh." Scott Grissom Chief Technology Officer Ferrari North America

Custom application development and integration with existing general ledger application

Clear understanding of unique procurement challenges

Conducted user acceptance testing to streamline onboarding

To make the right recommendation, Ricoh first needed to fully understand Ferrari North America’s business challenges to define how automation could be achieved through better purchase order request workflow. For example, what approval gates were needed? What dollar amount thresholds could be approved? The Ricoh team also needed to understand how to extract information or place information into another general ledger line of business application, Masterpiece®.

Ricoh worked with Ferrari North America and representatives from Masterpiece to develop a clear picture of what needed to be done. They presented their solution to Ferrari North America—leveraging the company’s existing SharePoint intranet portal to build an automated purchase order request workflow.

“From a development standpoint, Ricoh really understood the technology aspects of what we needed— dropdowns of all our suppliers, cost centers and key data,” said Grissom. “They also understood what we didn’t need because we weren’t going to be using this application for the next 10 years.

”With full buy-in from Ferrari North America, Ricoh proceeded to create the automated purchase order request workflow. They developed the custom application and conducted user acceptance testing. After successful user testing, Ricoh then went into full production of the application and finished with stabilization so the application could be maintained.

Once up and running Ferrari North America’s new purchase order request workflow pulled suppliers and account data directly from Masterpiece so authorized employees could automatically generate purchase order requests. Through the application, the purchase orders were routed to a requestor’s manager, the controller and Grissom for approval and then saved to the Masterpiece shared folder. Once a purchase order request was approved, the requestor received an email along with a unique purchase order number.

If a new supplier needed to be added, the application automatically routed a request to the requestor’s manager and the controller for approval. If approved, it was then sent to accounts payable to create a new Masterpiece vendor ID, which was then imported daily to the portal so purchase orders could be generated. The requestor automatically received an email notification if the request was rejected. In turn, they were notified via email after an approved request received an ID number.

“The application worked really well and we saw the benefits from using it,” said Grissom. “It gave us absolute accountability for our business groups in terms of what they were requesting and why. They were no longer bringing us manual purchase orders that were difficult to track.”

Automated purchase order request workflow

Built-in dashboard for visibility and accountability

Transparency to track purchase orders

Notifications generated and routed automatically

Enthusiastic user acceptance and adoption

With its interim purchase order request workflow application developed by Ricoh in place, Ferrari North America was able to shift its culture toward greater accountability and streamlined procurement.“

I expected a little more push-back from our business groups with this change, but Ricoh built the application with an intuitive design and user acceptance was very good,” said Grissom. “Within two months, everyone was very ingrained in the application.

”Ferrari North America’s purchase order request workflow application also provided a dashboard that Grissom visited several times a day to see all the orders that had been submitted, what was lingering and what needed to be approved. Before the application, he had to send purchase orders to the CEO or to Italy if a certain dollar level had been reached. Through the application, Grissom was able to simply send screen shots from the dashboard via email and convey information much more quickly and concisely.“

The dashboard really brought visibility and accountability to our procurement process,” said Grissom. Running up to eight Ferrari Challenge events kept the Ferrari North America staff on its toes. Being able to create separate purchase orders by event—and specific requests for hotels, events, tracks, etc.—made its procurement processes much more transparent.

“It’s a great way to provide a capsule of what it takes to do our races,” said Grissom. “All the costs were broken down and we knew exactly what we were approving.

”With several development projects now complete, Ricoh has become Ferrari North America’s go-to partner for applications. Down the road, if the luxury sports car importer needs a solution implemented quickly and done right, they know who to call.

“If we need an add-on piece, we know we can get exactly what we need from Ricoh to make our company more efficient and shore up our processes,” said Grissom. “If you’re looking for a specialized module for some functionality that you’ve been missing, I’d recommend enlisting the expertise of Ricoh.”

• Sales Inquiry
• attach_file Supplies
• miscellaneous_services Technical Support
• paid Account or Invoice

Purchase Order Automation: How It Works & 8 Benefits in 2024

Purchase order (Figure 1) automation can speed up and streamline the purchasing process. A manual purchase order process is error-prone, time-consuming, and distracts the accounts payable team from focusing on higher value tasks.

For instance, a telecom company had a procurement duration of 45 business days vs. the industry average of 25. By using RPA to automate the manual steps within the procurement process, they are claimed to have 1 :

• Saved 800 man hours annually
• Been on track for saving ~$27K annually
• Increased per-employee transactions
• Reduced cycle times

In this article, we will explain what purchase order automation, is and what automation tools automate it. We will also discuss how purchase order automation can help companies have a more robust purchasing process, by discussing its top 8 benefits.

How do you automate a purchase order?

Purchase order automation is using automation solutions to have robots automatically generate, approve, and send purchase orders to suppliers instead of a human staff doing it. 

The solutions leverage various automation tools, such as:

• RPA automates rules-based tasks within a PO creation process, such as data extraction and inputting.
• OCR and NLP read the content on a PO, standardize, and categorize it.
• API exchanges the PO’s data with other financial solutions, such as the financial close software.

However, using non-customizable legacy tools in PO automation can result by: 

• Stacking of variety of automation tools
• One to one matching only
• Human interventions
• No line level matching 
• Invoice line defaulting
• Fails in matching in case of deviations

Implementation of AI can enhance the level of PO automation. ML algorithms with continual learning features can overcome some of the obstacles mentioned above.

What are the benefits of purchase order automation?

Purchase order creation is mostly rule-based. This enables for purchase order automation, mainly by unattended RPA bots and APAI tools. The benefits of an automated purchase order system are the following:

1. Fast processing

Robots work faster than humans. It would take less time for a bot to generate a purchase order than it would take a human staff. RPA bots, thanks to their data extraction, OCR, and NLP features, would quickly:

• Create purchase orders by inputting the data onto a purchase order template
• Compare the purchase order’s terms against the rule-engin e for assessment
• Send it to the vendor’s email if approved, or to a human-in-the-loop for revision if not

RPA bots can eliminate the need for manual data entry. Moreover, they can process invoices in batches and with minimal human intervention.By utilizing the feedback-driven continuous learning features of APAI tools , the processing process can be also sustained autonomously.

2. Error-free

Processing purchase orders must be accurate in terms of the type of the good and the quantity stipulated in the purchase request. RPA bots can create accurate purchase orders by:

• Repeating the previous purchase order if needed
• Extracting data from bill of materials and inventory software
• Sending it to the correct vendor by cross-matching the category of the ordered goods and the vendor details
• Inputting the correct delivery timeline by extracting data from the manufacturing database as to when the good will be used in the production process

The benefit of automating purchase orders is minimizing the possibility of human errors.

3. Real-time purchase order approval process

Bots work within business-rules. The purchasing manager can standardize the PO process by programming the bot to assess the purchase requisition prior to sending them out to maximize oversight. This means the bots could assess the purchase requisitions based on the:

• Total amount limit
• Quantity limit
• Previous vendor history
• Lead time and the manufacturing cycle

Suppose a purchase order doesn’t meet the criteria, the RPA bots can restrict purchasing, flag the purchase order, identify the exceptions, and automatically route to the appropriate team member per the approval matrix (Figure 2). For instance, a purchase order might concern non-approved suppliers. Real-time notifications for purchase approvals stop these purchase orders before being sent out.

An automated matching process is also crucial for a real-time purchase order approval. Issues can occur when there is a need to match one PO to many invoices, or reverse. APAI Software can solve the complications with capabilities such as line matching.

4. Data-driven insights

A purchase order software can connect with other ERP and 3-rd party apps, such as order management system, resource planning, bill of material (BOM) software , and more to extract all order-related data into one location.

The benefit is complete visibility into the purchase order workflow where decision-makers have access to all the relevant data. This streamlines the purchase order management. For instance, a metric companies might care about is supplier performance, in the time it takes them to issue an invoice after receiving the purchase order. These event logs can be tracked on the visible dashboard.

Having data-driven insights help companies get closer to reaching the ideals of operational excellence .

5. Cost savings

Automating the rule-based, repetitive tasks of the purchasing process allows companies to have the accounting team focus on important matters, such as tending to internal approvals, monitoring suspicious activities, and analyzing the financial reports.

This results in the human staff spending their time in more value-driven activities. In addition, because RPA bots are scalable, a company can rest assured that its purchase orders will keep being processed without the need to hire additional staff.

A study has shown that manual purchase order processing costs ~$500 2 per purchase order. We weren’t able to find the number of individual purchase orders companies make to create an average estimate. But automating purchase orders can result in cost savings.

6. Digitization

Purchase order automation solution digitizes the purchase orders. This creates an audit trail for quality assurance and verification. For instance, if a team member might want to check who had authorized the previous purchase order, they can view it automatically.

Digitization also allows for digital archiving of all purchase orders. This reduces paper-based interactions and makes lookups easier.

APIs and orchestrators allow interconnections of purchase order software with other financial applications. This enables other financial tasks, such as general ledger entries , cash flow estimates, and financial reports creations , to be carried automatically via finance APIs . This helps the company save time in its accounting procedures.

7. Automated three-way matching

Three-way matching is reconciliation of:

• Invoices with purchase orders to verify
• Delivery receipts with invoices to release payment goods have been received

Automated purchase order software’s integration with other financial and supply chain applications enables real-time three-way matching that adds an extra layer of security to the purchase order workflows.

The benefit of automated three-way matching is that even if there are simultaneously multiple purchase orders, concurrent execution of RPA bots means each entire process is done in a rule-based and thorough manner.

8. Improved treasury management

Treasury management is managing a company’s liquidity. Automated purchase order processing helps with this by providing insights into the monthly order amounts, payment terms, accounts payable turnover and other metrics in the procurement process that affect treasury management.

Being able to pit such metrics against wider financial indexes of a company enables the finance managers to apply PO approvals to control spending, if the inflows and outflows do not match.

What is a purchase order?

A purchase order (PO) is a document the buyer sends the seller (Figure 1). It contains:

• The kind and quantity of the product the buyer needs
• Shipping details
• Payment terms
• Total order amount
• Buyer’s approval signature

A purchase order lays the transaction terms out and asks the seller to respect them.

What is the difference between a purchase order and an invoice?

• Purchase order: A purchase order is sent by the buyer to the seller, prior to payment and receiving of the goods.
• Invoice : An invoice is sent by the seller to the buyer. It contains the details of the transaction, which would match the purchase order if nothing has been altered in between. It binds the buyer to pay for the goods.

For more on fintech

To learn more about the technologies that are automating different finance processes, read:

• KYC Automation: 5 Technologies That Increase Transparency
• 5 Ways Expense Management Automation Can Help Businesses
• Use Automation in Each 6 Steps of Loan Processing Procedure

And if you want to automate one of your financial processes, head over to our financial services hub to find data-driven lists of vendors for different use cases .

We will help you through your vendor selection journey:

External Links

• 1. “ PR to PO Process Automation Case Study ” Proven Consult. Retrieved on December 5, 2022.
• 2. “ Total Cost to Perform the Procurement Process Group per Purchase Order .” APQC . November 30, 2020. Retrieved on December 2, 2022.

Next to Read

Top 13 automation use cases in private equity in '24, top 5 expectations in the future of finance in '24, use automation for 6 steps of loan processing procedure in '24.

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How 5 Companies Used AP Automation to Save and Thrive

Accounts payable teams face a constant flow of invoice and expense processing, research, and corrections. But what could these teams accomplish if freed from error-prone manual tasks that are better done by software?

AP automation enables your AP processing team to upgrade its role from performing endless mechanical functions to becoming a value-creation center. The secret to making this switch is choosing a fully featured automation solution that handles the rote work — giving your team members more time to produce better results on higher-value tasks. 

This article covers everything businesses should know about AP automation. It provides an overview of how automation functions within AP processes and uses case studies to illustrate the potential for creating savings and stability in AP.

Download the free tool: Invoice Tracking Template

How does automation work in accounts payable?

Automating an organization’s accounts payable system streamlines processes and reduces manual labor and errors. Automation from the point of procurement (called procure to pay or P2P) sets up procedures for routing purchase approvals, transmitting orders, approving supplier invoices, paying vendors, managing vendor information, and even assisting month-end close activities. 

It can also assist with digital transformation, using OCR data capture to convert paper invoices and streamline the business process by removing paper-based tasks. Automation can generate aging reports, vendor analysis reports, and payment history records. By automating accounts payable processes, organizations save time and money, increase accuracy, and free up team members for other tasks.

Invoice Tracking Template

Download the invoice tracking template to avoid costly mistakes, clarify financial patterns, and track spending throughout the year.

5 AP automation case studies and key takeaways

Want to see the power of end-to-end accounts payable automation in real-world applications? Check out these five success stories showing how Order.co helps bring organization, visibility, and savings to clients in a range of industries.

With 800 locations in 23 countries, WeWork was generating a lot of invoices — over 1 million per year. With such a high volume of invoice processing, the company struggled to rein in the costs associated with so much manual labor, which ranged from $20 to $24 per invoice (even higher than an already expensive typical manual processing cost of $15 to $40 per invoice). Instead of hiring 150 AP team members to handle the constant flow of invoices, they used Order.co as an AP automation solution for visibility and spend control.  

Order.co helped WeWork bring its AP department process under control by:

• Introducing a streamlined P2P system for scalable processing
• Automating a three-way match and invoice reconciliation process 
• Consolidating invoices to reduce the number of individual payments

The company now has an easy way to process requisitions (with the help of a direct integration with Workday), track its order and fulfillment metrics, and control spend across all its locations and vendors. It’s dropped its invoices per month to just 3,000. 

“Being able to automate our thousands of invoices was a huge time and money saver — it makes our lives so much easier.” — Kyle Ingerman, WeWork Finance Transformations Senior Manager

Manual processes often slow down the progress of fast-growing companies. As SoulCycle expanded to nearly 100 locations in the US and Canada, its manual AP and budget management procedures took a toll on productivity and accuracy. The company needed a way to automate its vendors, reduce the flow of invoices, and realize better cost savings. 

Order.co helped SoulCycle bring automation to its tracking and reporting by:

• Centralizing purchasing through the platform, thereby replacing dozens of vendor sites and logins with a single, curated location for ordering
• Offering substitution options that saved the company thousands of dollars and result in over $7,000 in rewards earnings monthly
• Consolidating its invoice payments from 1,500 invoices down to 1 easy-to-pay bill

“I can be self-sufficient — meaning able to add products, users, or locations on my own. I can also get a report without waiting for someone to provide me with the data. Ninety percent of the things I need to do, I’m able to do at the moment.” — Sarah, SoulCycle Operations Manager

Physical Rehabilitation Network (PRN)

This industry-leading physical therapy business operates 140+ locations and over 25 local brands that require a constant flow of supplies to meet client needs. However, with slow, manual processes, ordering and invoice payment took hours or days to complete. In 2020, PRN turned to Order.co to centralize its buying, automate its payment process, and gain visibility into its spending.

Order.co helped PRN automate and centralize the entire procure-to-pay process by:

• Consolidating hundreds of invoices per month into one easy payment
• Realizing $3,000 monthly cash savings on products
• Paying 85 vendors through a centralized bill pay system

“Having Order.co to manage our ordering has helped me evolve in my role with PRN because I have time to assist our company in larger projects to grow our network of physical therapy centers. The time Order.co saves me is a priceless gift!” — Liz Windle, PRN Facilities & Purchasing Coordinator

Clinton Management

This property management service is responsible for over 3,000 residential units, plus commercial, retail, and garage units across the US. With 12 locations, tracking spend for each one and creating accurate budgets became impossible. Clinton Management asked Order.co to help it get spending and visibility in line and consolidate hundreds of invoices to eliminate late payments.

Using the Order.co platform, Clinton got its spend management and reporting under control by:

• Automating 100% of offline vendor ordering to reduce labor and capture transactional data 
• Consolidating 109 vendors for better, more streamlined purchasing
• Implementing strategic sourcing to save over $1,200 per month

“Our vendors aren’t calling to ask where their payments are anymore. Our AP Manager doesn’t have to cut a single check. Order.co makes his life so much easier.” — Nadia, Clinton Management Director of Purchasing

This corporate catering and cafeteria solutions company helps businesses deliver customized, consistent, and diverse meal experiences. With four locations and hundreds of monthly invoices, ZeroCater needed a way to bring visibility to its spending, cut down invoice overload, and centralize purchasing for the company.

Order.co brought the company’s processes and data into alignment by:

• Consolidating 11 vendors for better purchasing efficiency
• Achieving 100% spend visibility for all locations
• Cutting down the number of invoices by 50x 

“If I have a project and I need a bunch of products, I just add them [to the Order.co catalog], check out, and get one invoice. In the past, I would have had to go to a million places and add it all together.” — Keith Bowles, ZeroCater IT & Operations Manager

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Creating an accounts payable automation strategy

Looking to build a new AP automation process into your organization or refine the automation practices already in place? Use these steps to ensure a smooth transition and rollout of the new system:

• Analyze the current accounts payable system to identify areas of inefficiency and improvement.
• Establish a timeline and goals for the implementation of the automated system. Building key performance indicators (KPIs) into the planning process helps to measure its success later.
• Create a plan to collect, cleanse, and transition data to the automated system.
• Research and select a vendor that offers an accounts payable automation system. Order.co offers spend management and AP automation in one platform.
• Integrate accounts payable automation technology with existing systems to share data and ensure accuracy.
• Build and document procedures to guarantee accurate and timely processing of payments.
• Train staff on the new automated accounts payable system. Provide a point of contact (either internally or through the automation software provider) to answer questions, address concerns, and validate accurate setup of vendors, items, and payments.
• Monitor the new system's performance and adjust the parameters or tech stack as needed.
• Measure the success of the accounts payable automation system according to the KPIs established at the project's outset. Solicit stakeholder feedback and ideas on how the system performs within the organization. 

AP automation vs. AR automation: What's the difference?

Although AP and AR can be automated using similar technology and systems, there are a few differences between the two:

• Accounts payable (AP) automation typically automates data entry, purchase order matching, invoice approval, and payment approval processes. In contrast, accounts receivable (AR) automation focuses on automating invoice creation, customer payment tracking, and collections processes.
• Robotic process automation (RPA) helps reduce errors in manual data entry and promotes faster invoice processing time, whereas AR automation helps ensure accurate invoices are sent promptly and facilitates better customer management.
• AP and AR automation require software or outsourcing investments to manage the process. For AP, a procurement management or spend management system helps take orders from purchase to payment automatically. For AR, an invoicing and billing system helps automate the invoice creation process, track customer payments, and manage customer accounts. AR systems also require security features for handling customer financial data according to regulatory requirements.

Order.co helps streamline accounting with AP automation

AP automation can optimize your organization's accounting function, leading to more savings, better efficiency, faster processing, and fewer mistakes. AP automation frees up your team to create value in other business areas. With Order.co, organizations can manage the procurement process from request to fulfillment to payment, removing repetitive tasks from the to-do list and improving daily operations within finance. 

Want to learn more about AP automation with Order.co? Schedule a demo today .

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A guide to automating your purchase order management with AI

In a world where Artificial Intelligence (AI) is redefining industries across the board, procurement is no exception. In this guide, we will delve into the purchase order process, explore the challenges of manual data entry, and discuss how AI solutions, such as Affinda’s AI Purchase Order OCR data extractor, can be used for purchase order automation.

Table of Contents

In a world where Artificial Intelligence (AI) is redefining industries across the board, procurement is no exception. The use of AI in procurement is rapidly advancing, offering innovative solutions to streamline processes and drive operational efficiency. One area where AI has increasingly been used is in the automation of purchase order management, transforming the way businesses handle their procurement transactions.

A purchase order (PO) is a critical document that formalises the agreement between a buyer and a seller for the purchase of goods or services at specified terms. It serves as a contract between the parties involved, detailing the items, quantities, and prices agreed upon. While traditionally a manual and time-consuming process, the reliance on AI technologies for automating purchase order management is on the rise, increasing efficiency, accuracy and speed of processing purchase orders.

According to Deloitte , Chief Procurement Officers are focusing on driving operational efficiency, enhancing ESG/CSR initiatives and digital transformation as key priorities in the near future. This demonstrates that the use of AI solutions in procurement, especially in data extraction from documents, will significantly impact the industry. By allowing the extraction of valuable data from procurement documents, such as purchase orders and invoices , AI technology enables organisations to make more informed decisions and streamline their processes.

In this guide, we will delve into the purchase order process, explore the challenges of manual data entry, and discuss how AI solutions, such as Affinda’s AI Purchase Order OCR data extractor, can be used for purchase order automation.  

What is a purchase order?

A purchase order, as defined by HubSpot , is a legal document a buyer sends to a supplier or vendor to authorise a purchase. Purchase orders specify the items the buyer intends to purchase and the desired quantities, serving as a formal documentation of the transaction for both the buyer and seller.

There are many different types of purchase orders, however their main function always remains the same. By issuing purchase orders, businesses can easily specify what goods and services they need from a supplier and when they’re needed by, ensuring operational efficiency and maintaining organisation. Not only that, but purchase orders help with budget and cash flow, financial auditing and business transactions.  

What is the purchase order process in procurement?

The PO process consists of four steps:

1. The purchaser creates a purchase requisition  

If you need to purchase goods and/or services, the first step is to create a purchase requisition. If you’re a team member, you’ll likely need approval from your business’ accounting or management team before the purchase order is made. Receiving approval reduces the risk of any mistake or redundancy when the order is made, as well as ensuring that the goods and/or services requested are within the business’ available budget.

2. The purchaser issues a purchase order

The second step, once you’ve received approval to request goods and/or services, is to issue a purchase order. If you don’t know what a purchase order looks like, you can do a quick Google search or create your own. The format of a purchase order is very simple, as long as it has the required fields: Purchase Order Number, Purchaser’s details, Vendor’s details, Order Date, Delivery Date and goods and/or services description, cost and total. If your business has a PO process in place already, you may send the purchase order through to the vendor via email, or any other informal communication channel, such as Slack.

3. The vendor approves, rejects or negotiates on the PO

When the vendor receives your PO request, they have the option to approve, reject or renegotiate the purchase order. This third step is generally completed quickly as most purchase orders are only issued once they have been approved. However, if negotiations are needed or if the vendor rejects your purchase order for any reason, you’ll need to repeat steps 1 and 2.

4. Once approved, the purchaser records the purchase order

Make sure that the purchase order is recorded after it has been approved. After the goods and/or services have been delivered or performed, the vendor will send an invoice that the accounting team will need to action which should exactly match the purchase order.

What are the challenges in manual data entry and processing?

For many years, it was common practice for employees to manually enter purchase order data into spreadsheets or record keeping systems. However, with the development of AI solutions designed to automate purchase order management, you can now save time and improve data accuracy and efficiency. Here are the three key challenges faced by businesses that still rely on manual data entry instead of implementing AI technology:

Processing purchase orders manually is a time-consuming task that demands a large amount of employee time and resources. Many businesses cite cost as a reason for not integrating intelligent document automation into their processes, but this justification is misleading. If your business receives a high volume of purchase orders on a daily basis, this can lead to higher costs and may require the hiring of additional staff to handle the workload. According to a 2018 report by Goldman Sachs , the direct and indirect costs of manual, paper-based invoice processing total $2.7 trillion for global businesses. Therefore, sticking with manual data entry methods could be negatively impacting your business's financial performance. ‍

2. Errors in data entry

Errors in manual data entry can be extremely harmful to businesses. They can impact internal operations, customer satisfaction, and supplier relationships. When money is involved, these errors can result in overpayment or underpayment to vendors, overcharging or undercharging clients, disruptions to accounting and auditing processes, and potential financial or legal troubles. According to a study conducted by the Journal of Accountancy , human error rates in manual data entry can range from 1% to 5%, depending on factors such as the complexity of the data and the experience of the data entry personnel, while automated data entry boasts an accuracy rate of around 99.99%. In terms of procurement, this means that a human processor handling 1,000 purchase orders may make at least 10 errors, whereas an automated system would likely only have 1 or 2 mistakes. ‍

3. Slow turnaround time

Manual data entry is time-consuming. Humans are not machines and cannot work at the same speed consistently for long periods. According to iTech , the expected manual keystrokes for text documents data entry ranges from 10,000 to 15,000 strokes per hour. Thus, if a purchase order contains 250 units of data, it would take someone between 4 and 6 minutes to input a single purchase order. If your PO volume is high, this becomes an extremely inefficient process and can delay purchase order processing, causing business inefficiencies.

How to automate purchase orders in the procurement process with Affinda

Automating purchase order management with Affinda’s AI data extraction solution is simple. Here’s how:

Step 1: Upload your documents to Affinda directly to our app, or by integrating with email or document management platforms ‍

Step 2: Our advanced AI purchase order data extraction technology will automatically scan, extract, label and categorise the data on any purchase order uploaded in seconds. ‍

Step 3: Export the data in a structured and usable format. Integrate our purchase order extractor with any downstream system or platform to use your data where you need it most ‍

Step 4 : Need an AI data extractor customised to your specific business needs? Our expert team can build a model tailored to your business workflows that integrates seamlessly with existing processes. Talk to us.

What makes Affinda different from other PO OCR solutions?

Affinda's document AI technology combines 10+ years of IP in document reconstruction, with the latest advancements in computer vision, natural language processing and deep learning. We process millions of documents every year with over 500 satisfied customers around the world. That’s why we’re specialists in purchase order data extraction and automation, with our AI Purchase Order extractor constantly learning and evolving to meet the specific needs of our customers. Our purchase order data extractor also:

• Has superior accuracy, with an accuracy rate of almost 100%
• Automatically scans and extracts from over 50+ purchase order fields
• Supports multiple file formats, including PDF, JPG and PNG
• Supports over 56 languages
• Allows for bulk purchase order data extraction
• Is highly flexible and customisable, with the ability to be tailored to suit your specific business use case
• Can be seamlessly integrated with your existing business processes, systems and platforms for ease of use

Get started with purchase order automation for your business

In this digital age, leveraging AI technology to simplify and automate your purchase order processes is no longer an option, but a necessity. From enhancing operational efficiency to reducing errors and cost, the benefits of AI automation in procurement are immense. Affinda’s AI Purchase Order OCR data extractor brings this transformative technology straight to your doorstep. Our tool is not just about streamlining procurement; it’s about giving your business the competitive edge it needs.  

With this guide, we hope you now understand how AI automation can transform your purchase order management, and why Affinda is the best choice for your business. Are you ready to get started? Try our PO data extractor for free or contact our team for a free demo to see how we can help streamline your business’ purchase order management.

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Helping organizations spend smarter and more efficiently by automating purchasing and invoice processing.

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• Where the best opportunities for savings are in indirect spend.
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• How to report and analyze indirect spend to identify savings opportunities.
• How strategic sourcing, cost management, and cost avoidance strategies can be applied to indirect spend.

What is Purchase Order Automation?

• Written by Keith Murphy
• 15 min read

KEY TAKEAWAYS

• Purchase order automation automatically turns requisitions into POs and sends them out to vendors
• Purchase order software is necessary to achieve purchase order automation
• Purchase order automation improves the procurement process while saving time and money

Automation can reduce the time required to complete the PO cycle by half

• Increased visibility over spend and flexibility to spend as you need are also benefits of purchase order automation

Purchase order automation means using software to digitize purchase orders and automate the purchase order process to reduce manual steps.

This involves automatically sending purchase requisitions out for approval, automating approval workflows, then once approved, automatically sending the PO to the vendor.

It replaces the need for traditional paper purchase orders and tracking purchase orders using excel, and streamlines purchase order workflows. It will also enforce any purchase order policy you put in place.

Handling orders manually is time-consuming and error-prone and can create an avalanche of problems within your organization: paper goes missing, duplicate orders get processed, and approvals take too long.

The purpose of purchase order automation is to solve these problems by reducing the amount of time and labor needed for the purchase order process.

Automating the purchase order process also makes things easier for suppliers. When they get the automated PO, suppliers can quickly convert that to an accurate invoice. This makes it easier for your accounts payable (AP) department to manage the payments.

Purchase order automation software can add an additional layer of protection for your business through automated three-way matching .

This process helps to automate accounts payable by automatically checking POs, invoices, and receipts/packing slips to ensure you’re only receiving ordered items and only paying for the goods and services received.

If there’s a mistake where goods and services were not received—or the wrong product was shipped—the issue is quickly spotted so the AP team doesn’t blindly pay invoices or leave invoices sitting too long.

Whether you’re sending purchase orders or receiving them, automating the purchase order system can help manage everything more effectively, reduce work, and reduce costs.

How Do You Automate the Purchase Order Process?

Automating the purchasing process will involve implementing purchase order software and moving your processes from paper and Excel into it. Then, you’ll set up automation for all of your existing processes and start to save time.

The steps to go from a manual to an automated purchase order process look like this:

Identify a Suitable Software

Consider your requirements and research the best software to cover your current and future needs. Planergy is a flexible and customizable software built to scale with you. It can be used to automate the purchase order process but also covers the full Procure-to-Pay process.

Integrate With Financial Systems

The first step is to map your integrated ERP and/or accounting system to the purchase order software to ensure all the required information is available. The software provider should offer support to ensure you get up and running quickly with the required data for your custom needs.

Define Policy and Approval Workflows

In addition to mapping fields from integrated systems, you’ll also want to define your purchase order policy and set up the purchase order approval process so that requisitions can be approved and automatically turned into POs, which are then automatically sent to suppliers.

Different approval workflows may be needed for different departments as well as at different monetary thresholds.

Implement Automation

Once the information you need is in the system and approval flows are set up, it’s time to automate purchase orders. Your purchase order software will enable your team to set up an automated flow where users can create a requisition, route that requisition to the required approvers, turn that requisition into a PO, then email that PO to your preferred supplier.

Ideally, this can be done from anywhere at any time over a cloud-based app, giving you more flexibility and faster approval times.

What Are the Benefits of Purchase Order Automation?

Moving from manual processes or outdated systems to purchase order automation comes with multiple benefits.

While large businesses have clear benefits from making this switch due to their large scale, even small businesses will eventually outgrow the old way of processing purchase orders and benefit as well.

(Graphic idea: Visual representation of the purchase order benefits listed here, with the heading ‘Benefits of Purchase Order Automation’)

Key benefits of purchase order automation include:

Reduced Potential for Human Error

Purchase orders are binding legal contracts between a buyer and a seller. They must indicate the types, quantities, and agreed-upon pricing for products and services. Internally, they are used to control purchasing and to keep an eye on departmental budgets and overall cash flow.

Mistakes on the PO lead to back and forth between the vendor and the buyer to get things right. This leaves organizations spending more money than intended, tying up cash with incorrect orders, or even slowing down production.

Manual purchase order management creates a higher potential for errors, which then must be tracked down and addressed.

Errors include incorrect supplier names and codes, lack of authorization, failure to place orders with preferred suppliers, illegible handwriting, and failure to complete all required information.

Automated systems have the functionality to send an alert if information like supplier codes or names are missing, automate approval workflows to ensure proper authorization, and flag when non-preferred suppliers are requested—all of which reduce human error.

Improved Procurement Process

An automated purchase order system enables team members to set user permissions for approval routing, data entry for each supplier (uploading contracts, adding products and services to the catalog, payment terms, etc.), and more. Once setup is complete, it becomes easy to streamline the procurement process.

Business rules and approval templates can be set up to streamline the purchase order process. These rules can enforce who can:

• Submit purchase requests for their department
• Approve requisitions and convert them to purchase orders
• See and process invoices
• Make budget changes

They can also set which requisitions need approval, and by who. All of this is captured by an audit trail in case it’s needed for review.

For example, you can set a rule that any purchase under $50 is automatically approved. For higher-value purchases, you can set approvers for each department and send them automatic alerts when there is a requisition to approve. Once that’s approved, it can automatically become a PO and get emailed to the vendor.

Automation Saves Time and Money

Paper or Excel-based purchase order processing is time-consuming and has higher labor costs than automated purchase order processing.

With an automation solution, all the information needed to place an order is ready to go, automated approval flows are in place, and requisitions can turn into POs quickly.

Along with reducing repetitive tasks, automation can reduce the time required to complete the PO cycle by half, according to the American Productivity and Quality Center (APQC)’s Open Standards Benchmarking .

Rather than being printed, scanned, faxed, or mailed, these processes happen in real-time. Approvers are alerted instantly and POs are sent to suppliers right away. Documents spend no time sitting on people’s desks and less time getting processed. It’s also easier to track down records and past actions in the case of an audit.

When PO processing moves faster, it frees up significant time and money for procurement teams to focus on other business processes that create more value.

Greater Spend Visibility

Reporting features provide visibility into each department’s spending. This visibility enables you to secure better deals with your existing vendors and helps you figure out if you should find new vendors to work with.

Along with measuring supplier performance, you’ll have a better pulse on how the entire supply chain is performing. Purchase order software also enables you to search through all documents in the system and view the status of orders, invoices, and payments at any time—providing complete visibility over your procurement process.

Flexible Workflows

Purchasing automation software provides the flexibility to configure the system to meet your needs, whatever they may be. It makes it possible to restrict purchasing to certain dollar thresholds, suppliers, or specific items. Or, you can create blanket POs and automatically route them for approval.

The software will be flexible enough to meet your needs even for unique purchasing situations.

Enforces Compliance

Purchase order automation software has the added benefit of also automating the purchase policies and internal controls for purchasing a company sets in place. Policies such as the approval matrix, lists of approved suppliers, and required audit trails are programmed into the system for automatic, unbreakable compliance.

When people try to ‘go rogue’ and purchase without proper approval or from a non-preferred supplier, they won’t be able to. Even then, everything is recorded in an audit trail and can be recalled for compliance audits at any time.

This can also help companies automatically enforce other policies such as ESG (environmental, social, and corporate governance). If it is part of a company’s ESG goal to only purchase supplies from companies that don’t excessively pollute or exploit foreign workers, that can be baked into the purchase order software and automatically enforced.

Purchase Order Automation Makes Your Organization Better

Purchase order automation provides many benefits, including increased productivity, better compliance with corporate policy and contract terms, increased visibility into company spend , and more.

When using the platform to gain a deeper understanding of your buying patterns, you can locate strategic cost savings opportunities that provide a significant competitive advantage.

Organizing purchasing is essential to keeping maverick spending at bay and maximizing working capital. As your business grows, keeping track of company spend becomes critical to effective operations—and purchase order automation can become a key driver of value for your company.

What’s your goal today?

1. use planergy to manage purchasing and accounts payable.

• Read our case studies, client success stories, and testimonials.
• Visit our Purchase Order Software page to see how Planergy can digitize and automate your purchase order process saving you time and money.
• Learn about us, and our long history of helping companies just like yours.

2. Download our “Indirect Spend Guide”

3. learn best practices for purchasing, finance, and more.

Browse hundreds of articles , containing an amazing number of useful tools, techniques, and best practices. Many readers tell us they would have paid consultants for the advice in these articles.

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Powering procurement with prediction + automation

• Call for Change
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Call for change

Accenture is an intelligent enterprise that applies artificial intelligence (AI) technologies and embeds analytics into our operations. Our CIO Applied Intelligence organization collaborates with Accenture business stakeholders to drive new, innovative capabilities and use case-based intelligent products to bring greater insights to Accenture’s businesses.

With 721,000 employees around the world, Accenture purchases a high volume of goods and services, amounting to nearly 200,000 purchase orders annually. Our global procurement organization, Procurement Plus, uses SAP Ariba’s Guided Buying capability on SAP Ariba Buying and Invoicing Software-as-a-Service (SaaS) to optimize spend totaling more than $4.5 billion dollars every year. Internally, Accenture branded the SAP Ariba product to Accenture BuyNow. Accenture also processes 1.1 million invoices annually through our accounts payable function. We realized that buyers of Accenture goods and services were less familiar with the downstream accounting of their purchases, and that this was creating friction and driving inefficiency and cost into the process.

There was an opportunity to improve efficiency in purchase requisitioning and non-purchase order invoice processing by using predictive analytics and automating the recommendation of general ledger accounts to buyers at the point of purchase. Predictive analytics, embedded as AI, and automation better prepare buyers who are less familiar with accounting to be more accurate with their purchases and significantly streamlined downstream accounts payable accuracy, time and cost.

The challenge: To create an artificial intelligence model using predictive analytics that provides general ledger recommendations for goods or services being purchased, improving subsequent accounts payable accuracy and efficiency and enhancing the procurement experience for Accenture.

When tech meets human ingenuity

The starting point for the development of our General Ledger Recommendations began with the artificial intelligence model we connected to Accenture’s BuyNow procurement solution and our SAP S/4HANA® accounts payable solution. Accenture Procurement Plus worked with CIO Applied Intelligence to develop the solution for both purchase order-based and non-purchase order-based spend. For purchase order-based buys, BuyNow needed to improve the assignment of general ledger accounts at the point of purchase requisition. For non-purchase order-based buys, Accenture needed to improve the assignment of general ledger accounts within the accounts payable process. Both situations were manual, time consuming and prone to error.

To increase accuracy and efficiency, Accenture Procurement Plus and CIO Applied Intelligence designed an artificial intelligence model to recommend the best account from more than 5,000 available general ledger accounts. Drawing from the accounting on historical purchases and invoices, the model recommends the general ledger accounts for new buys at the point of entry. The solution was directly embedded into the Accenture BuyNow platform experience.

From a technology perspective, CIO Applied Intelligence approached the problem as one of classification. First gathering historical purchase and accounts payable activity, the team ingested the data into Accenture’s data lake. The team then used the data to build and train a General Ledger Recommendation model with an AI machine learning algorithm. Using the patterns created on the historical data, the model was also able to make a predictive recommendation of a general ledger for a purchase.

Once the model was trained, the team embedded the solution into both the Accenture SAP S/4HANA accounts payable process for non-purchase order-based buys and the BuyNow procurement process for purchase order-based buys. The model continues to learn and retrain itself to increase its accuracy in making classifications for new goods and services buys.

Driving an intelligent enterprise

Cio 24/7 podcast: general ledger recommender solution, a valuable difference.

AI is helping Accenture to move to a new generation of business process intelligence. Analytics products like these are advancing Accenture’s transformation journey to becoming an enterprise that is automated, intelligent and insight-driven.

CIO Applied Intelligence continually drives innovation and applies predictive models, AI and machine learning to products to bring greater insights to the business. Within CIO Applied Intelligence is the Studio, the research and development organization of data scientists, user experience experts and software engineers that experiments and builds advanced analytics solutions. It operates with a culture of creative agility, following emerging technology market trends, prototyping new analytics concepts and working with a fail-fast culture. A thriving analytics ecosphere is promoting winning ideas.

Analytics products are advancing Accenture’s transformation journey to becoming an enterprise that is automated, intelligent and insight-driven. Accenture envisions this future digital-insight culture as one that delivers new value in many ways. Accenture’s reporting landscape will become simplified as more clarity on what to use is gained. There will be broader insights into business performance as all business dimensions will be supported with digital insights—anywhere.

By integrating seamlessly with Accenture’s BuyNow and SAP S/4HANA solutions to recommend general ledger accounts for purchase order-based and non-purchase order-based buys, the General Ledger Recommendation solution is projected to deliver significant business value including:

Accuracy and efficiency

Annual savings through decreased accounting staff review and error correction during downstream accounts payable processing.

Improved procurement experience

For buyers of Accenture's multi-billion annual spend on goods and services and the ongoing optimization of that spend by our Procurement Plus team.

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Related capabilities, how accenture does it, accenture + sap, corporate services & sustainability.

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INTELLIGENT AUTOMATION CASE STUDY

Improved accuracy with purchase order management in coupa.

Industry : BPO and Business Services, Cross-Industry

Function : Accounting and Finance

Home » Resources » Case Studies » Improved Accuracy with Purchase Order Management in Coupa

Greater purchase accrual accuracy

Reduced risk of inaccurate payments

Improved PO SOC compliance

Company Profile:

Worldwide digital company providing a trusted platform that interconnects foundational infrastructure, enabling organizations to access all the right places, partners and possibilities to accelerate competitive advantage.

Automation Case Study Snapshot:

• Industry : BPO and Business Services , Cross Industry  
• Challenge : Inconsistent PO Processing  
• Solution : Wonder Botz Procure-to-Pay  
• Outcome : Inc reased accuracy and reduced risk

Are you ready to add WonderBotz to your organization?

Challenge: inconsistent purchase order management.

This global infrastructure provider issues a wide variety of purchase orders each year, ranging in value from $10,000 USD and up. The POs were managed by individual owners, and those owners did not consistently perform the maintenance needed to close and complete POs. These inconsistencies caused processing delays, accounting accrual complexities, and threatened compliance.  

Leadership wanted to ensure that completed purchase orders were properly marked and maintained throughout the entire process. They sought an automation solution that would track purchase order management each step of the way and notify business users as they progressed.   

Solution: WonderBotz Procure-to-Pay Automation Improves Accuracy

WonderBotz provided an intelligent Procure-to-Pay automation solution that operates through user-defined and maintained business rules. The rules customize purchase order handling based on the PO’s monetary value and its recent activity.   

The bot evaluates activity from the prior six months and calculates a score, then sends a personalized alert to the PO owners once a week for three weeks. Upon notification, the purchase order owner can either confirm that the PO is ready to close or initiate a dispute in Coupa. Management is also notified of activity on high-value POs. Low-value purchase orders will be closed if the owner does not respond within a set timeframe.  

By keeping purchase order owners in the loop, this automation made POs easier to consistently maintain and reduced the risk of errors. The notification system reduced processing delays and ensured process completion.  

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Automating Purchase Orders in Microsoft Business Central

Project scope.

Applications Used

The integration of Automaited with our Microsoft Dynamics Business Central system has been a game-changer, especially in managing out-of-stock situations. The time and accuracy improvements in purchase order creation are phenomenal

Chief Information Officer

The Challenge

The company faced significant challenges in manually creating purchase orders in Microsoft Dynamics Business Central. This process was cumbersome due to:

• Navigating through various Microsoft Dynamics Business Central modules
• Manually entering product details and supplier information
• Coordinating with different departments for order approvals
• Ensuring accuracy in data entry to prevent order delays or errors

Implementation

• Purchase Order Creation
• Inventory Management
• Microsoft Dynamics Business Central

Automaited’s solution focused on automating the entire process of purchase order creation within Microsoft Dynamics Business Central.

Previous Manual Process

The manual procedure involved multiple steps:

• Identifying out-of-stock products through inventory checks.
• Accessing different modules in Microsoft Dynamics Business Central for order creation.
• Manually entering product, supplier, and order details.
• Coordinating with procurement and finance departments for order approval and validation.

Automated Process

With Automaited's AI assistant:

• Automatic detection of out-of-stock products and initiation of purchase order creation.
• AI-driven data entry for product and supplier details in Microsoft Dynamics Business Central.
• Automated coordination for internal approvals and validations.
• Real-time updates and notifications on the order status.

The adoption of Automaited's solution resulted in remarkable improvements:

• Efficiency: Substantial decrease in time required for creating purchase orders.
• Accuracy: Marked reduction in data entry errors, ensuring correct orders.
• Inventory Management: Improved oversight and management of stock levels, leading to better customer satisfaction.

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How Purchase Order Automation Can Streamline Your Operations

In today’s rapidly evolving business landscape, streamlining operations is a top priority for many organizations. One area where automation can have a significant impact is in purchase order processes. Automating certain tasks associated with purchase orders can save your organization time and money, while reducing errors and improving supplier relationships. In this article, we’ll explore the benefits of purchase order automation , the steps required to implement it, and the key components of an automated purchase order system.

Understanding Purchase Order Automation

What is purchase order automation.

Purchase order automation refers to the use of software tools and technologies to automate various tasks involved in the purchase order process. This includes generating purchase orders, sending them to suppliers, tracking orders, receiving and approving invoices, and more. An automated purchase order system can help eliminate manual tasks, reduce errors, and improve the efficiency of purchasing operations.

The Evolution of Purchase Order Processes

Traditionally, purchase orders were created manually using paper-based processes. This involved manually generating purchase orders, sending them to suppliers via mail or fax, and waiting for them to be filled. Once the orders were received, they had to be manually entered into the accounting or ERP system and tracked manually until the product or service was received and invoiced.

However, with the advent of technology, businesses began to automate parts of this process by using electronic purchase orders and EDI (Electronic Data Interchange) systems. While these systems improved efficiency, they often required significant upfront costs and technical expertise to implement.

Currently, the use of cloud-based software has made it easier and more affordable for businesses to automate their purchase order processes. This has led to an increase in adoption of automated purchase order systems across various industries.

Key Components of an Automated Purchase Order System

An automated purchase order system typically includes the following key components:

• Electronic Purchase Orders
• Order Tracking
• Invoice Automation
• Vendor Management
• Reporting and Analytics

In conclusion, an automated purchase order system can help businesses streamline their purchasing operations , reduce errors, and improve efficiency. With the use of cloud-based software, it has become easier and more affordable for businesses to implement automated purchase order systems. By including key components such as electronic purchase orders, order tracking, invoice automation, vendor management, and reporting and analytics, businesses can optimize their purchasing processes and achieve greater success.

Benefits of Implementing Purchase Order Automation

Implementing purchase order automation can bring numerous benefits to your business. In addition to the benefits already mentioned, there are several other advantages to automating your purchase order process.

Improved Visibility and Control

Automating your purchase orders can provide greater visibility and control over the entire procurement process. With automated systems, you can track the status of your purchase orders in real-time, from creation to delivery. This can help you identify potential bottlenecks and take corrective action to keep your orders on track.

Streamlined Approval Processes

Automated purchase order systems can also help streamline the approval process . With automated workflows, purchase orders can be routed to the appropriate approvers based on predefined rules. This can help reduce approval times and ensure that purchase orders are approved by the right people.

Better Financial Management

Automating purchase orders can also improve your financial management. By integrating your purchase order system with your accounting software, you can track expenses more accurately and easily. This can help you identify areas where you can reduce costs and improve your bottom line.

Improved Forecasting and Planning

Automated purchase orders can also help you improve your forecasting and planning. By tracking your purchase orders in real-time, you can better anticipate demand and adjust your inventory levels accordingly. This can help you avoid stockouts and reduce the risk of overstocking.

Enhanced Customer Service

Finally, automating your purchase orders can also help improve your customer service. By reducing errors and delays in the procurement process , you can ensure that your customers receive their orders on time and in the correct quantities. This can help improve customer satisfaction and loyalty.

Overall, implementing purchase order automation can bring numerous benefits to your business. From improved efficiency and accuracy to better supplier relationships and financial management, automated purchase orders can help you streamline your procurement process and improve your bottom line.

Steps to Implement Purchase Order Automation

Automating your purchase order process can save time, reduce errors, and improve efficiency. Here are the steps you need to follow to implement purchase order automation:

Assessing Your Current Purchase Order Process

The first step in implementing automated purchase orders is to assess your existing process. This will involve identifying any manual tasks and the associated costs and inefficiencies. You will also need to identify any pain points in the process and opportunities for improvement.

For example, you may find that your current purchase order process involves a lot of manual data entry, which is time-consuming and prone to errors. You may also find that there are delays in the approval process, leading to missed deadlines and unhappy suppliers.

Choosing the Right Automation Software

Once you have assessed your current process, you will need to select an automation software that fits your needs. Look for a solution that is flexible, scalable, and supports the features your business requires. Ensure that the solution integrates with other systems you use to maximize efficiency and minimize disruption.

For example, you may choose a cloud-based solution that can be accessed from anywhere, or a solution that integrates with your existing accounting software.

Integrating with Existing Systems

Once you have selected an automation software, you will need to integrate it with any existing systems you use. This may involve configuring databases, APIs, or other software integrations. Ensure that the integration is tested and functional before rolling out the new system.

For example, you may need to integrate your purchase order automation software with your inventory management system to ensure that you have the right amount of stock on hand at all times.

Training Employees and Suppliers

Implementing automated purchase orders will likely require training for your employees and suppliers. This may involve training on software usage, changes to existing processes, and new data requirements. By investing in training, you can help ensure that the new system is integrated quickly and efficiently and that your team is comfortable using it.

For example, you may need to train your purchasing team on how to use the new software and how to interpret the data it generates. You may also need to train your suppliers on how to submit invoices and purchase orders through the new system.

Monitoring and Optimizing the Automated Process

Finally, once the system is implemented, it is essential to monitor and optimize the automated process continually. Regularly reviewing and analyzing data can help identify areas for improvement and fine-tune the system to maximize efficiency and effectiveness over time.

For example, you may find that certain suppliers are consistently late in delivering goods, which is causing delays in your production process. By analyzing the data generated by your purchase order automation software, you can identify these suppliers and work with them to improve their delivery times.

Automated purchase orders can provide significant benefits to businesses of all sizes. By eliminating manual tasks, reducing errors, improving supplier relationships, and increasing cost savings, purchasing automation can streamline your organization’s processes and provide a competitive edge. With careful planning and implementation, automated purchase order systems can provide an essential foundation for growth and success in today’s competitive marketplace.

If are looking to automate your existing manual processes, get in touch with our experts to make the transition seamless. Book a personalized demo to see how it works.

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What Is Purchase Order Automation? (And How to Do It Right)

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What is Purchase Order Automation?

Purchase Order Automation is the method of using an automation platform to enforce and automate a purchase order approval process. A centralized software would automatically send a purchase request to the appropriate team member for review and approval. Once approved, the PO would automatically be created within the ERP, eliminating the need for data entry. Ultimately, it removes the requirement for people to physically route purchase orders for review and approvals via physical paper or email and streamline the process.

A Purchase Order process can look different for many organizations and it can include many different people and departments. Usually, it consists of the below steps:

However, these are the REQUIRED steps. In reality, there are many more steps involved in a manual process.

With an automated process in place, your accounting team can more easily manage incoming invoices, payments, and allow them to focus on higher value activities. It also enforces a purchasing process and rules, so that your team can put in levels of control to protect your business.

Depending on how many Purchase Orders are created each month, your team could be looking at drastic savings and benefits from implementing an automated solution.

Common Challenges from Manual Processing

Often when processing in a manual, paper-based environment, organizations face many similar challenges. While these may not all the same for you, we see that the below issues are often what drives automation at an organization.

• Lack of efficiency in process
• Paper heavy
• No accountability or visibility into the process
• Security risks
• No process regulations or control
• Time burdensome

Whether your organization is experiencing these or not, there are many benefits that you and your team can take advantage of by leveraging an automation solution to drive your purchase order process.

The Benefits of Purchase Order Automation

If you are dealing with lots of paper, email, legacy systems, and lack of security when processing Purchase Orders, then implementing an automation solution will provide you and your team with many benefits. Whether you are a small company or large, organizations of all sizes can take advantage of automation and reduce the time spent on low value activities.

While results vary for every organization, below are the most common benefits that companies experience when automating their Purchase Order Process:

• Increase of process efficiency

Cost Savings

• Reduction of human error
• Visibility into Processes

Flexibility & Control

Increase of Process Efficiency

An automated procurement process allows you to decrease your processing times and increase process efficiency. From the streamlining of mundane & repetitive tasks, to ensuring that the process is followed according to the rules and controls set in place, automation empowers your team with the ability to have full visibility and confidence.

When processing Purchase Requisitions and Orders manually, steps are duplicated, missed, and time is spent on low-value activities. Often, things are overlooked or purchased twice because there is no control over the process. Automation allows your team to move to real-time processing. There is no longer a delay between PO approvals to getting the information over to the vendor. This provides significant time savings and because of the full audit trail, there is no longer any time spent tracking down missing orders or documents.

Leveraging automation not only reduces the processing time, but also eliminates steps altogether. Below is an example or an automated Purchase Order process. The manual steps required has dramatically decreased, allowing team members to have more time to focus on higher value activities.

When an organization is processing in a manual environment, there are many costs associated both expected and unexpected. While companies anticipate the related costs of paper, ink, time spent on processing the POs and overhead, many often don’t include the costs of actions and tasks that aren’t documented. For example, the time spent looking for missing documents, chasing approvals, processing orders twice, and more.

A study by APQC revealed that manual purchase order processing can cost organizations as much as $506.52 per PO. What this means is that if an organization is processing ONLY 10 purchase orders a month, they are spending around $60,000 annually on this process. Automation provides a decrease in processing times and costs, allowing companies to put more money back in their pockets.

Reduction of Human Error

Let’s face it, as humans we often make mistakes. While most of them are harmless, there are some cases when these errors can cost companies thousands, and sometimes hundreds of thousands, of dollars. From mistaking a 10 unit purchase of an item on a PO to accidentally ordering 1000, human error threatens an organization when they are processing purchase orders manually.

An automation solution removes the need for manual data entry and allows your team to put checks in balances in place to prevent from making mistakes. The system will automatically flag items that are outside of purchase policy and it allows you to determine thresholds on purchases.

Visibility into the Process

Be honest, when was the last time you asked yourself, “Who has that document?” or “Has this been approved yet?” These are common questions that are asked when processing purchase orders manually. There is no way to identify where things are in the process, who has the PO, and whether or not it has been approved. Too much time is spent on chasing approvals, following up on orders, and figuring out where things are.

By leveraging an automation platform, your team will no longer spend time on searching for information or checking on the status of POs. With instant visibility into where things are in the process, your team is able to immediately determine where things are in the process, who has them, and the status of each PO.

While most organizations process Purchase Orders in similar ways, EVERY company we have worked with has something unique to their process. Whether they require additional levels of approvals based on dollar amount thresholds or are required to do competitive pricing on the item requested, there are always unique exceptions for a company processing POs. In a manual environment, this is challenging to manage and enforce. Things often fall through the cracks and are missed.

When using an automation platform, you can dictate who is able to make decisions, purchases, and more. The system enforces the process that you and your team puts in place so that you can have confidence that the rules and security protocols are being followed. Whether your team has a complex process or a simplified one, automation provides the flexibility and control your team needs to get purchase orders processed efficiently.

When done with the right partner, purchase order automation provides your organization with many benefits and ability to focus on higher value activities. Your team will be able to have insights into types of purchases your team is making, how frequently, and understand your own buying patterns. Purchase order automation is the first step in moving towards an automated accounting department. It’s time to ditch the old way of processing and begin to set a foundation for your company’s growth.

To learn more about how your team could benefit from Purchase Order Automation, schedule a time to connect with our team to run through an ROI report.

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Purchase Order Processing

Woman’s Hospital has automated a six-step workflow to process the purchase orders the hospital sends to vendors.

Boston WorkStation searches the Meditech system once or twice a day for purchase orders that have been entered by various medical and surgical departments, then checks the departments' inventories - also kept on the Meditech system - for items that have fallen below minimum reorder points, and it either creates a new purchase order or adds those items to an existing purchase order.

The process also examines vendor information to ensure that the purchase order meets minimum order and other requirements, and then sends the purchase orders to vendors electronically or via fax, sending an email notification to buyers if the purchase order fails to go through for any reason such as failing to meet vendor minimums. Buyers can then add items to the order or hold it until that minimum is met. Woman’s has reduced their unnecessary minimum order fees to zero, and those penalties had been costing more than $300 a month.

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Boston Software Systems © 2024 All rights reserved Toll Free: 866 653 5105 Support: 866 653 5105 x1 Case Study: Reducing Purchase Order Cycle Time, Part 1 Published: March 18, 2019 by Andy Atkins This is a Green Belt project the author led at a large financial data services company. The project was designed to reduce the overall cycle time for procurement to issue a fully approved requisition into a purchase order dispatched to the supplier. Following the Lean Six Sigma (LSS) methodology, part 1 of the case study includes the Define and Measure stages of DMAIC. Part 2 features the Analyze, Improve and Control stages. In the 16 months prior to the start of this project, the Strategic Sourcing department generated approximately $10 million in savings, an amount verified by independent associates in the Finance department . While Strategic Sourcing associates at the company are responsible for the large impact to the company’s bottom line, they are also burdened with the tactical work associated with issuing a purchase order to the supplier. The time spent on this tactical work represents a loss in the department’s ability to affect the bottom line through negotiations and supplier relationship management. Project Charter Project name : Requisition to purchase order process Problem statement : 85 percent of purchase orders (POs) require manual intervention by buyers, resulting in an efficacy ratio of 44 POs/month/buyer. Company does not have a consistent process for the creation of POs in the system once a requisition is approved. Benchmark efficacy ratios: Median: 50 POs monthly per buyer* Laggard: 21 POs monthly per buyer* * According to the American Productivity & Quality Center (APQC). Business case : Global procurement has reported cost savings (SAR) in the amount of $9.6 million/quarter for the past 16 months. If the department can increase the productivity per buyer by 6 POs/month, this would result in 9,485 hours or 4.5 full-time employees’ (FTE) ability to instead focus on strategic value to the company. Global procurement could increase SAR by $2 million/year. In scope : Requisitions that are manually sourced to a PO by a buyer. The process begins when a requisition is submitted in the system of record and ends when a PO is dispatched to a supplier. Out of scope : Current catalog auto-sourced (purchase orders generated directly from an online catalog that do not require a sourcing intervention) and interface (orders that come directly into the system from a vendor site and do not require the involvement of a sourcing associate) POs. International POs or POs not sourced through procurement. Goal statement : Within three months, create a consistent, documented repeatable process for creation of POs to boost the efficacy ratio of 44 POs/month/buyer to 50 POs/month/buyer. The cycle time for the purchase orders to be issued delayed the business units’ ability to receive the product and/or service associated with such savings (Figure 1). Additionally, the cycle time was interfering with the Sourcing associates’ ability to contribute toward the savings – avoidance or recovery – objectives (SAR). In addition to the dollar impact to the tactical work, multiple FTEs were needed to issue POs, creating inconsistency in timing as well as resource issues. The savings  was estimated at approximately $2 million in addition to a reduction in the number of FTEs required to process the POs. SIPOC Analysis The SIPOC (suppliers, inputs, process, outputs, customers) analysis begins with an email that is distributed to all sourcing associates that details a list of the requisitions with approval that need to be sourced to a PO. Since the categories for each sourcing associate are blurred, it’s a challenge for each associate to know who to send them to – creating distribution issues and adding to the cycle time. Voice of the Customer (VOC) We issued a one-question survey to about 170 employees – those who issue the most requisitions throughout the company. Based upon your experience, how long does it take procurement to process a fully approved requisition into a purchase order? 41% = less than a business week 31% = 2 weeks 24% = 1 month 4% = longer than a month Voice of the Business (VOB) A similar question was asked to assess the VOB . What is your desired timeframe for how long it should take procurement to issue a fully approved requisition into a PO? 72% = less than a week/5 business days Process Map Looking at the as-is process map (Figure 3), there are a striking number of steps and failure points in the process. It’s amazing that purchase orders are dispatched with any frequency! There are more than 40 steps in the current process, which has a direct result on cycle time. Communication Plan The communication plan shown in the table below was developed and shared with the project’s stakeholders. Updated Project Charter Changes to the charter were made after discussions on the potential impact of the project. It was determined that the project should result in an increase in productivity per buyer by at least 6 POs per month. The process would likely require fewer procurement representatives to process all the POs and could result in an increase in auto-sourced POs – or even move these to the Procurement to Pay (P2P) team. This, in turn, would free up resources from procurement to focus on strategic activities. This increase in productivity by the same 13.6 percent (the increase from 44 POs/buyer/month to 50 POs/buyer/month) should increase the SAR by an additional $5.5 million. Updated business case : Global Procurement reported SAR in the amount of $9.6 million/quarter for the past 16 months. If the team can increase the productivity per buyer by 6 POs, this would result in a 13.6 percent increase in POs/buyer and allow the P2P team to source all POs under $50,000. This in turn would allow Sourcing to focus on strategic activities, which should increase productivity by the same 13.6 percent, resulting in an additional cost savings of $5.5 million. In scope : PeopleSoft (supply chain management software) requisitions that are manually sourced to a PO by a buyer. The process begins when a requisition is submitted in PeopleSoft and ends when a PO is dispatched to a supplier. Out of scope : Current catalog auto-sourced and interface POs. Qualitative Analysis In order to make the process efficient enough to either auto-source POs or transfer responsibility to the P2P team, it was necessary to review the as-is process map and determine which steps were non-value added. These steps couldn’t necessarily be immediately eliminated – it’s likely that a complete reconfiguration of the process would be needed. However, identifying the non-value added steps showed the team the complicated workflows that have high numbers of potential failure points and add additional stress to the outcome of the process. (See Figure 4.) The red process steps represented non-value added steps that do not contribute toward the completion of the activities. The yellow process steps represented value-enabled steps (steps that were added to satisfy stakeholder requirements). The green steps represented value-added steps (steps that contributed to the completion of the process). The review revealed two key findings: 23 of the 43 steps were determined as non-value added steps. Fully one-half of the steps determined how to distribute requisitions to the correct buyer. Measurement Plan This measurement plan was originally sent out to determine the length of time taken for each PO. As the project proceeded in the Measure phase, the focus shifted from the time to complete the PO to the number of days it took before the PO was dispatched to the supplier. The measurement plan included the total number of minutes spent processing purchase orders. After the VOC survey it became clear that our internal clients were concerned with the length of time expressed as number of days as opposed to the number of minutes it took for an associate to produce a purchase order. It was also better data because we could precisely calculate the time the requisition was approved from the time the PO was dispatched thanks to the system’s time stamps. In addition, when looking at the problems in the Define and Measure phases, it became clear that the actual time spent producing the PO was irrelevant because even if we were able to speed that up, it would still bottleneck at the distribution phase (from how the requisitions were assigned to each associate for processing into a PO). We couldn’t meet our clients’ requirements until the distribution was fixed. Once the baseline data was collected, it became apparent the 40-step process was breaking down in the distribution of the requisitions to the buyers. While the mean number of days for 2015 and 2016 was relatively low (3 and 2, respectively), the standard deviation was another story. The standard deviation for 2015 was at 12 and 4.5 for the first part of 2016. This meant that the USL – upper specification limit, which was defined in this project as the number of days acceptable to issue a PO by our internal customers – was exceeded a whopping 47 percent (2015) and 33 percent (2016). Said another way, almost half of the POs that were being issued went beyond the five-day acceptable service level set by the internal customers (Figure 5). Once the numbers provided insight to the significance of the problem, a fishbone diagram was created (Figure6) after a brainstorming session to highlight potential areas to test. The circled items represent areas the team wanted to test to determine how likely each issue was to affect the overall cycle time of the PO process. Click here to read Part 2 . About the Author Andy Atkins Cognizant Healthcare Client: Cognizant Industry: Healthcare Region: Europe Region: North America How Healthcare Organizations Unlock Productivity by Processing Semi-Structured Documents with UiPath Document Understanding and AI Center from first cutover to production with expected confidence levels reduction in time with GPU for training of the scanned documents are semi-structured of the documents are structured Client Overview Cognizant is one of the world’s leading professional services companies, transforming clients’ business, operating, and technology models for the digital era. The company applies a unique industry-based, consultative approach to help many of the best-known organizations envision, build and run more innovative and efficient businesses. UiPath and Cognizant helped leading healthcare clients automate purchase order processing and redact documents with AI, saving time, improving accuracy, and reducing risks. As the pandemic continues to rage on, the need for automation and efficiency has never been greater in healthcare. This is especially important for providers in areas like New York where hospitals are being pushed to their brink while also dealing with massive budget cuts —challenging teams to work faster, and more efficiently, particularly regarding processing information. One organization that’s working to close the healthcare automation gap is  Cognizant , one of the world’s leading professional services companies transforming clients’ business, operating and technology models for the digital era. This case study examines two ways Cognizant successfully used UiPath AI Center and Document Understanding to help a leading New York-based healthcare provider achieve an advanced state of workflow automation. Use case #1: Automating credit adjustments for purchase orders One of Cognizant’s clients manages a chain of hospitals spread across the New York area. This company draws from a supplier network of over 500 manufacturers for items like bandages, syringes, and masks. All orders are entered and managed through the PeopleSoft ERP application. For various reasons, suppliers do not always process orders accurately. This is typically due to item shortages or intake errors. For example, a supplier may order 2,000 syringes but only 50% of the order may be fulfilled. This results in overpayments and delayed shipments. And when that occurs—and it happens often—suppliers issue credit memos back to the hospital. “When we came on board to help the client, we noticed immediately that credit memos were exceedingly high,” explains Abhinav Kolhe, Head Technology Office: Intelligent Automation at Cognizant. “This was because suppliers tend to send data in various formats, which is difficult to process.” According to Abhinav, 20% of the data that arrives is structured, 65% is semi-structured and scanned, 10% is in digital PDFs, and 5% is semi-structured and handwritten. “Before we started using UiPath, it took us an average of eight minutes to conduct data entry,” explained Abhinav “This was too long.” Cognizant and its client needed to implement a method that would enable them to make credit adjustments on POs to prevent large credit backlogs from increasing. Ultimately, the right solution would enable them to compare and validate data between documents and their ERP system. To streamline this process, Abhinav and his team implemented UiPath AI Center and Document Understanding technologies and integrated them with the client’s robotic process automation (RPA) engine. Since deploying AI Center  and Document Understanding, the healthcare provider can process credit memos faster and more accurately—saving time, decreasing errors, and reducing backlogs. Interestingly, Abhinav’s team also discovered that one of the Document Understanding machine learning models for invoice processing could be repurposed to help build a new credit memo model, too. “Our team took roughly 250 training sets from about 20% of the suppliers that were providing around 80% of the incoming data, and retrained the model using UiPath Data Manager. This way we did more with less, and achieved faster ROI.” Abhinav also commented on how long it took to train their model. Initially, our team used a central processing unit (CPU) for training, which took about 18 hours for 400 documents. After switching to a graphical processing unit (GPU) box, model training was reduced to just 10 hours — a 40% reduction in time. Abhinav Kolhe • Head Technology Office: Intelligent Automation According to Abhinav, UiPath also proved to be highly versatile: "As we see more complex document types, we need a platform or solution that combines deterministic data extraction with probabilistic data extraction. UiPath Document Understanding framework enables both deterministic and probabilistic approaches." Abhinav also likes the human validation that UiPath enables. Abhinav mentioned the Action Center as a key feature that UiPath offers with AI Center and Document Understanding, which makes it easy to hand off processes from robots to humans. “Action Center is one critical element that is used for human validation or a correction station interface,” Abhinav says. Use case #2: Document redaction In a separate use case, one of Cognizant’s customers needed to redact documents to remove personally identifiable information (PII) and personal health information (PHI) before transmitting them to partnering agencies for claim validation. When done manually, this is a very time-consuming process as each document contains roughly 10 pages on average, and most of the data is in a semi-structured format. “We have to make sure that document redaction accuracy is very high for compliance purposes,” Abhinav says. Abhinav and his team created a three-phase workflow to discover and redact PII and PHI data. The workflow includes document storage, an automation engine, and a human review process. Abhinav and his team first created a bot to pull documents from a storage folder and pass them along to AI Center document classification tool. Next, each document is transmitted for OCR extraction and then integrated with a medical domain search tool using medical data pulled from the PubMed biomedical search engine. At this point, the document is analyzed for critical keywords that needed to be redacted, including specific drug names. This is accomplished using UiPath Taxonomy Manager, which is a tool for defining document fields for processing. Afterwards, the redaction bot determines whether all PII and PHI is removed according to the specific document type. If the document passes through, it’s sent to a redacted documents folder. If the sensitive data is detected, a human in the loop process kicks in, triggering a manual review. Missed redactions can then be sent back through the process. The result is a highly secure system to protect sensitive information, which could potentially result in fines and other penalties. The system is also designed to reduce human intervention, gradually reducing the need for manual analysis as the model gets smarter and more effective at reducing errors. AI Center in particular has been instrumental for what we are trying to accomplish with this particular use case. Using AI Center, our model is able to continuously learn and improve. Abhinav Kolhe • Head Technology Office: Intelligent Automation Lessons learned Using AI Center  and Document Understanding has also been a tremendous learning experience for Abhinav and the team at Cognizant. Here are some key lessons that Abhinav has learned throughout the course of his automation journey, which you can apply to your own use cases. Variability analysis is key for success Variability analysis involves analyzing documents to discover pattern changes over time. This process, Abhinav says, must be performed before you take any project into the data extraction phase. According to Abhinav, it’s critical to conduct variability analysis of document types across and within documents throughout the entire enterprise. Deep learning is more like a bionic arm than a robot Remember that deep learning is more like a bionic arm than a robot. In other words, it’s more human-centered and should be thought of as an extension of an employee—not a replacement. Process automation is therefore much more practical compared to a robot-centered automation solution. Data labeling is a critical step Abhinav also strongly encourages SMEs to get involved in the labeling process . This shouldn’t be left to an IT team to handle. “If you don’t involve business SMEs, it’s very likely that the model will go wrong,” says Abhinav. Human in the loop is key to overall ROI Ultimately, you need a validation station and a human in the loop to achieve overall ROI. AI is not human, after all, and sometimes you’ll need to rope employees into the process to ensure tasks are done the right way. Model explainability is the only path to continuous improvement According to Abhinav, you ultimately should strive to ask why a model extracted data the way it did. Your platform should be able to tell you what the false positives and negatives are during extraction and what’s causing them. Abhinav also shared this story at the webinar on How AI Can Continuously Improve and Scale Automations — you can watch it on-demand . What can UiPath do for your company? UiPath Document Understanding and AI Center unlock new automation opportunities, help organizations make better decisions and reach new levels of productivity. Where will your automation journey take you? Take UiPath for a spin and find out for yourself. Related case studies University Hospitals Plymouth NHS Trust Swedish Medical Products Agency Ready for your own case study. Speak to our team of knowledgeable experts and learn how you can benefit from RPA. Cognitive Automation for Order Processing Reduces running costs and errors simultaneously. Description of Problem The client receives lots of orders from hundreds of customers daily. They originally have a department to process orders manually (around 5 persons). Information about end-customers’ orders need to be entered into their ERP (Enterprise Resource Planning) system to create Sales Orders. Orders come in different ways: Emails of Purchase Orders from large end-customers (Format of PO from the same end-customer is the same every time) Email of Order Forms from smaller end-customers (standardized Excel file provided by Client) Ther are also orders from phone calls, WhatsApp/ SMS messages, free-flow email text, etc. (Note: these were not automated in the end, as the ROI was not significant.)  Client Overview: A company that manufactures and distributes chemicals. Manufacturing Processes Type: Order Processing How Gleematic Helps Gleematic was trained to recognize and extract data from various formats of Purchase Orders (type-written text, either native PDF files or scans) using A.I. Intelligent Document Extraction. Gleematic could also read data from standardized Excel Order Forms. Gleematic could automate opening of emails, downloading of attachments, extracting of data, checking/ validation, and finally enter data into ERP system. Degree of Robotization: 75% Effort Automated ROI: 3 Months Human Error Rate Reduced Manual Effort Reduction to 75% Faster Processing Time: Reduction of 65% More Standardization High-Quality Improvement No More Repetitive Administration Get Free eBook Cognitive Automation: What is it and how to implement it successfully Get Your Free Trial Why Choose Gleematic Gleematic Features Our Company Our Customers Our Partners Testimonials Sponsorship Hospitality Finance & Accounting Human Resources Marketing & Sales What is Cognitive Automation Intelligent Document Extraction Bahasa Indonesian AI Other Asian Languages News & Events Case Studies Subscribe to Our Newsletter 1 Wallich Street, Guoco Tower 14-01, Singapore 078881 Call: +65 6403 3844 | +65 9186 6195 Funded by 500 Startups: Cognitive Automation 自动化 Otomatisasi tự động hóa 안녕하세요 自动化 Otomatisasi tự động hóa オートメーション ยินดีต้อนรับ 自动化 Otomatisasi オートメーション ยินดีต้อนรับ Copyright Gleematic A.I 2021 – All Rights Reserved, Data Protection Policy Role of Automation in Purchase Order Accuracy & Compliance As a business grows, its functions evolve and it becomes more complex, and each process can be difficult to manage. It is essential to keep costs as low as possible when you are starting up your business. One of the critical challenges the businesses face is tracking purchase orders in a traditional way manually with an excel document or similar. Manually handling purchase orders might lead to mistakes being made and manual errors. Also, there comes too much information you need to keep track of. It also becomes a time-consuming and tedious process to track orders and stock levels. For the smooth functioning of any business, streamlining the purchase process is substantial. If manual ordering processes are causing errors and delays, then it is the right time for a business to opt for purchase automation, Implementing purchase automation for a business can help to systematize the procurement of business and minimize unwitting and cost involved mistakes. By automating, the purchase department can quickly spot errors and rectify them before any damage occurs. Also, it can ensure that an organization is adhered to the current purchase policies. Many businesses will thrive after incorporating into an Automated Purchase Order System . It substantially overshadows the cost of mistakes that occur eventually. Automate your Purchase Operations | Reach us WhatsApp What Are the Benefits of Purchase Order Automation? There are some very clear benefits of having an automated purchase order system. Generally, it gives you greater visibility and less room for error. Here are some of the other benefits. 1. Incredible Integration Most businesses have multiple software applications, which can cause problems when it comes to obtaining an all-encompassing view of your purchase orders, inventory levels, and production schedules. Integrating your systems and automating them can make companies more effective by eliminating inefficiencies. While integrating data can help you stock products at the right time, you do not need to cut your margins or increase prices unreasonably. Purchase order automation manufacturing systems are programmed in such a way that they can flawlessly function with other accounting and buying software. 2. Minimize Mistakes Businesses naturally experience some errors but getting rid of the confusion that results from numerous manual systems is a simple way to minimize mistakes while enhancing precision. Technically speaking, purchase orders are legal contracts between buyers and sellers, therefore they should be handled correctly. Additionally, business organizations may also lose money as well as spending extra time on correcting issues made during these transactions. However, adapting to an automated purchase order system could dramatically eliminate errors while improving workflows. Take a Look at our Most Popular Automation Use Cases 3. Support Suppliers Automating purchase ordering process not only helps to systemize your business, it also helps your suppliers, vendors, and clients to operate efficiently. Suppliers can receive automated Purchase Orders promptly, which in turn helps your supply chain process more efficiently, and you can ensure that clients will receive a better service. Overall, it will be a win-win situation for everyone. 4. Better Budgeting It is a well-known ideology in business that reducing the recurring errors paves a way for cost reduction. However, it is essential for any business to track budget periodically as well as accurately. With purchase automation, you can effortlessly track purchase information such as purchase orders, invoices, and vendor details. Automated purchase also helps your business to operate with different currencies. 5. Perfect Procurement Automated purchase order tracking also ensures the below checkpoints: You can ensure that your material requirements are clearer. You can have real-time control over your inventory progress. You can have a relief that your supply chain will be more informed. 6. Control Compliance Improving compliance of the company is one of the challenging processes for a business. By incorporating purchase automation, you can keep informed with data including list of approved suppliers, specific audit trials, and ESG (Environmental, Social, and corporate Governance) requirements. It means the company perfectly adheres to those protocols. How Can you Implement an Automated Purchase Order System? Now, are you confused about where to get started with automating your purchase order system? Here are simple steps that guides you to get started with automation: 1. Choose the Software Determine your purchase automation requirements and find the Best Automation Service Providers package that supports your existing processes and integrates with the other software your business is using. 2. Connect your Finances After choosing your automated purchase order system, make sure to link it with your existing accounting system, invoicing, and purchasing workflows. 3. Customization Now, make sure that the purchase automation system is customized according to your business needs. 4. Deployment Once everything goes perfectly and you are satisfied with the designs and functions, get started with automating your purchase order system. 5. Training Ensure to provide proper training for your employees on the purchase order automation system and make them understand how it works. The better they understand, the business process gets simpler, easier, and efficient in no time. With iSQUARE’s purchase automation software, you can improve your purchase process with ease. Our customized purchase automation software helps you to have a better relationship with vendors and manage inventories effectively. Interested in automating your purchase operations? Schedule a call with our team of experts! 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We appreciate you contacting us isquarebs Mobile App Development Web App Development UI/UX Design Website Development eCommerce Development SaaS App Development ERP Development CRM Development Life at iSQUARE Buyer’s Guide: Procure-to-Pay Software Updated: Aug 22nd, 2024 • 6 min read Purchase Order Process Flow: From Creation to Payment Every dollar matters when it relates to your company’s bottom line. Whether you are reporting to your board, trying to streamline your company spending, or aiming to maximize the margins on your products, being able to quantify and account for every dollar coming out is a top priority for finance teams. One area within an organization that has significant saving potential is procurement. Businesses can save up to 30% on procurement costs by optimizing their purchase order processes. That amount is no small drop in the bucket. Crafting a streamlined purchase order (PO) process is essential for efficient business operations, ensuring that all transactions are accurately documented and managed. In this article, we’ll walk you through the purchase order process flow, from creation to payment, helping you understand each step and its overall importance to your procurement strategy. Understanding the purchase order process What is a purchase order? A purchase order (PO) is a document issued by a buyer to a supplier, indicating types, quantities, and agreed prices for products or services. It’s a formal request to purchase, serving as a contract once accepted by the supplier. The PO outlines the specifics of the purchase, ensuring both parties have a clear understanding of what is being ordered, the terms of the agreement, and the payment conditions. Importance of a structured purchase order process Having a well-defined purchase order process brings numerous benefits, such as improved accuracy in transactions, better supplier relationships, and significant cost savings. It ensures that all purchases are authorized, budgeted, and traceable. A structured PO process helps prevent fraud, reduces errors, and ensures compliance with internal policies and external regulations. Ready to streamline your purchase order process? Discover how our purchase order software can help you gain control over your procurement, save time, and maximize cost efficiency. See it in action by requesting a demo today! Step-by-step purchase order process flow Step 1: Purchase requisition The purchase requisition is an internal document created by a department requesting the procurement of goods or services. This step is crucial as it lays the foundation for the entire purchase order process. Purchase requisition starts with authorization . The purchase requisition must be approved by relevant authorities within the organization, ensuring that the purchase is necessary and that funds are available. During the need assessment stage, the department requesting the purchase needs to justify why the items or services are needed. This involves evaluating current inventory levels, upcoming projects, and business requirements. And finally, you will need requisition forms , which are detailed forms specifying the required items are filled out. These forms include information such as item descriptions, quantities, preferred suppliers, and expected costs. Step 2: Purchase order creation Once the requisition is approved, a purchase order is created. This document includes: PO templates : Standardized templates ensure consistency across all purchase orders. These templates typically include fields for all necessary information, reducing the chance of missing details. Essential elements : A complete purchase order includes a PO number, date, supplier details, item descriptions, quantities, prices, and terms. Including all these elements ensures clarity and prevents disputes. Step 3: Purchase order approval Before sending the PO to the supplier, it undergoes an approval process . This step adds a layer of oversight to ensure the accuracy and appropriateness of the order. For multi-level approvals , different levels of management review and approve the PO. This might involve department heads, finance managers, and procurement officers, depending on the organization’s structure and the purchase’s value. Another PO approval method is through automated approval systems . Many organizations use software to streamline and track approvals. These systems can automatically route POs to the appropriate approvers and maintain a record of the approval process. Step 4: Sending purchase order to supplier After approval, the PO is sent to the supplier through various methods: Email, EDI, procurement software : Ensuring the PO reaches the supplier promptly is crucial. Electronic Data Interchange (EDI) and procurement software can automate this process, reducing delays and errors. Tracking delivery : Monitoring the dispatch and receipt of the PO is important to ensure timely processing. This can be done using tracking numbers and receipt confirmations. Supplier confirmation : The supplier acknowledges and confirms the PO. This confirmation ensures that the supplier has received the order and agrees to the terms outlined. Step 5: Order fulfillment and delivery The supplier fulfills the order by delivering the goods or services as specified in the PO. This step involves delivery schedules , timely delivery in accordance with agreed terms is crucial. The supplier must adhere to the delivery dates specified in the PO to avoid disrupting the buyer’s operations. And this step also includes receiving goods , where the buyer receives and checks the delivery. This involves inspecting the items to ensure they match the specifications in the PO. Step 6: Receiving and inspection Upon receiving the goods, they are inspected to ensure they meet the specifications outlined in the PO: Verifying quantities and quality : Ensuring the delivered items match the PO in terms of quantity and quality is essential. This involves counting items and checking for any damage or defects. Documenting discrepancies : Any discrepancies between the PO and the delivered goods must be documented and addressed. This might involve contacting the supplier to resolve issues or arranging for returns or replacements. Updating inventory : Adding received items to inventory records ensures that inventory levels are accurate. This is important for maintaining stock levels and planning future purchases. Step 7: Invoice matching and approval This step involves the three-way matching process to ensure accuracy before payment. It is a critical control mechanism to prevent overpayments and fraud. The three-way matching process compares the PO, receiving report, and supplier invoice. All three documents must match in terms of quantities, prices, and terms before payment is authorized. You must also handle discrepancies . This involves resolving any mismatches is important to ensure accurate payments. Handling discrepancies might also involve contacting the supplier for clarification or issuing a debit note for overcharges. Leveraging automated matching systems involves using software to streamline this process and can significantly reduce errors and speed up the approval process. Automated systems can flag discrepancies and route them for review. Step 8: Payment processing Finally, the payment to the supplier is processed. This step ensures that suppliers are paid accurately and on time. Adhering to agreed payment terms is important for maintaining good supplier relationships. Payment terms might include net 30, net 60, or other arrangements. Common payment methods include checks, wire transfers, or electronic payments. The method chosen can depend on the supplier’s preferences and the buyer’s policies. Recording the transaction means documenting the payment in the accounting system, ensuring that financial records are accurate and up-to-date. This is important for budgeting and financial reporting. Best practices for an efficient purchase order process Automation and technology Leveraging procurement software can significantly streamline the purchase order process, reducing manual errors and saving time. Automation can handle repetitive tasks, such as generating POs and routing them for approval, freeing up staff to focus on more strategic activities. Standardization and templates Using standardized forms and templates ensures consistency and efficiency across all purchase orders. Templates can include all necessary fields, reducing the chance of missing important information. Standardization also makes it easier to train staff and implement process improvements. Regular audits and reviews Conducting regular audits helps maintain compliance and identifies areas for process improvement. Audits can uncover issues such as unauthorized purchases , discrepancies between POs and invoices, and delays in the approval process. Addressing these issues can lead to significant cost savings and process efficiencies. Training and communication Ensuring that staff are well-trained and maintaining clear communication channels with suppliers can prevent misunderstandings and errors. Training should cover the entire purchase order process, from requisition to payment, and emphasize the importance of accuracy and compliance. Clear communication with suppliers helps ensure that orders are fulfilled accurately and on time. Frequently asked questions (FAQs) about the purchase order process A purchase order (PO) is a formal document issued by a buyer to a supplier, specifying the types, quantities, and agreed prices for products or services. It serves as a legally binding contract once the supplier accepts it. The purchase order process is crucial for ensuring accurate, authorized, and traceable transactions. It helps in maintaining clear records, preventing fraud, managing budgets, and fostering better supplier relationships. A purchase order typically includes: Date of issue Buyer and supplier details Item descriptions and quantities Unit prices and total amount Delivery dates and locations Payment terms Any specific terms and conditions A purchase order is issued by the buyer to request goods or services, while an invoice is issued by the supplier to request payment for the goods or services provided. The PO outlines what is being ordered, and the invoice outlines what has been delivered and the amount due. Three-way matching is a process used to verify that the purchase order, receiving report, and supplier invoice all match. This ensures that the quantities, prices, and terms are consistent across all documents before payment is made. Automation can streamline the purchase order process by reducing manual errors, speeding up approval workflows, and providing real-time tracking and reporting. Automated systems can handle tasks such as generating POs, routing for approvals, and matching invoices. The common steps include: Purchase requisition Purchase order creation Purchase order approval Sending the purchase order to the supplier Order fulfillment and delivery Receiving and inspection Invoice matching and approval Payment processing Clear and timely communication, adhering to agreed terms, making timely payments, and providing feedback can all contribute to better supplier relationships. Using a streamlined and transparent purchase order process also helps in building trust and reliability. Strategic procurement often leads to more intentional spending practices. More specifically, a well-structured purchase order process creates opportunities to make your overall business operations strategy more efficient. By following the end-to-end steps outlined in this guide, you can ensure your transactions are accurate, timely, and well-documented. Modernizing your current PO processes with the right procure-to-pay software will not only improve your supplier relationships and spend visibility, but you will also be able to accurately quantify your savings. Webinar: 5 Strategies for Cost Reduction and Value Creation Learn how best-in-class procurement leaders are leveraging the right technology to streamline operations, reduce costs, and improve the effectiveness of their purchasing. Share this article: Explore Procurify 280 IMAGES Corporate Purchase Order Automation Purchase Order Automation: The Definitive Guide Corporate Purchase Order Automation Purchase Order Automation: How to Do the PO Process? Document Automation What Is Purchase Order Automation? How to Automate PO?- Cflow VIDEO Use this 6-step method when you are behind on everything Zerodha User : Place/Cancel unlimited GTT order through one click tool Purchase Order vs. Sales Order: What Comes First? Building a Business Case for Accounts Payable Automation International Women's Day 2024 Xerocon 2023 Wrap COMMENTS Purchase Order Approval Workflow Automation Once a purchase order request was approved, the requestor received an email along with a unique purchase order number. If a new supplier needed to be added, the application automatically routed a request to the requestor's manager and the controller for approval. If approved, it was then sent to accounts payable to create a new Masterpiece ... Purchase Order Automation: How It Works & 8 Benefits in 2024 Inputting the correct delivery timeline by extracting data from the manufacturing database as to when the good will be used in the production process. The benefit of automating purchase orders is minimizing the possibility of human errors. 3. Real-time purchase order approval process. Bots work within business-rules. PDF CASE STUDY: SONIC MANUFACTURING Purchase Order Automation Purchase Order Automation Next-Level E!ciencies Achieved through API Integration CASE STUDY: SONIC MANUFACTURING With aspirations of a fully automated and digitally integrated supply chain, Sonic Manufacturing selected Orbweaver for integration with its suppliers, the first partnership of its kind in the electronics industry. Sonic provides ... Top Case Studies Featuring AP Automation Success 5 AP automation case studies and key takeaways. ... Accounts payable (AP) automation typically automates data entry, purchase order matching, invoice approval, and payment approval processes. In contrast, accounts receivable (AR) automation focuses on automating invoice creation, customer payment tracking, and collections processes. ... A guide to automating your purchase order management with AI Here's how: Step 1: Upload your documents to Affinda directly to our app, or by integrating with email or document management platforms. ‍. Step 2: Our advanced AI purchase order data extraction technology will automatically scan, extract, label and categorise the data on any purchase order uploaded in seconds. ‍. What is Purchase Order Automation? Purchase order automation automatically turns requisitions into POs and sends them out to vendors. Purchase order software is necessary to achieve purchase order automation. Purchase order automation improves the procurement process while saving time and money. Automation can reduce the time required to complete the PO cycle by half. Powering Procurement with Prediction & Automation Accenture Procurement Plus worked with CIO Applied Intelligence to develop the solution for both purchase order-based and non-purchase order-based spend. For purchase order-based buys, BuyNow needed to improve the assignment of general ledger accounts at the point of purchase requisition. For non-purchase order-based buys, Accenture needed to ... Improved Accuracy with Purchase Order Management in Coupa Solution: WonderBotz Procure-to-Pay Automation Improves Accuracy. WonderBotz provided an intelligent Procure-to-Pay automation solution that operates through user-defined and maintained business rules. The rules customize purchase order handling based on the PO's monetary value and its recent activity. The bot evaluates activity from the ... Automating Purchase Orders in Microsoft Business Central This case study explores the integration of Automaited's AI-driven assistant with Microsoft Dynamics Business Central at a prominent retail company. The focus is on automating the process of purchase order creation, a critical aspect when products are in demand but out of stock. ... Automated coordination for internal approvals and validations. How Purchase Order Automation Can Streamline Your Operations Purchase order automation refers to the use of software tools and technologies to automate various tasks involved in the purchase order process. This includes generating purchase orders, sending them to suppliers, tracking orders, receiving and approving invoices, and more. An automated purchase order system can help eliminate manual tasks ... What Is Purchase Order Automation? (And How to Do It Right) Less Risk: Purchase orders are legally binding contracts. Automating the process ensures that you don't over/under the order or pay. Plus, it's more secure. More Visibility: PO automation keeps your data centralized and your systems integrated, giving your real-time reporting and complete transparency. Purchase Order Process Automation with Human-in-the-Loop ... Purchase Order. Automation. Intelligent Automation simplifies complex processes like purchase order automation, to the point where human involvement is least. This video demonstrates how Intelligent Automation allows using the Human-in-the-Loop functionality to intervene only at the point of low confidence and make the relevant correction. What is Purchase Order Automation? Purchase Order Automation is the method of using an automation platform to enforce and automate a purchase order approval process. A centralized software would automatically send a purchase request to the appropriate team member for review and approval. Once approved, the PO would automatically be created within the ERP, eliminating the need ... Purchase Order Processing Case Study Woman's Hospital has automated a six-step workflow to process the purchase orders the hospital sends to vendors. Boston WorkStation searches the Meditech system once or twice a day for purchase orders that have been entered by various medical and surgical departments, then checks the departments' inventories - also kept on the Meditech system - for items that have fallen below minimum ... Purchase Order Report Case Study How cognitive automation (the combination of AI and RPA) helps companies in manufacturing to automate the purchase order reports? Read the case study here. Purchase Order Automation Purchase Order Automation is the way to use an automated platform to automate and enforce the approval process of purchase orders. Centralized software will automatically transmit a purchase order to the team member responsible for being reviewed and approved. ... Download free case study. Payroll Reconciliation Automation. Your email address ... Case Study: Reducing Purchase Order Cycle Time, Part 1 This is a Green Belt project the author led at a large financial data services company. The project was designed to reduce the overall cycle time for procurement to issue a fully approved requisition into a purchase order dispatched to the supplier. Following the Lean Six Sigma (LSS) methodology, part 1 of the case study includes the Define and ... RPA Case Study in Healthcare Use case #1: Automating credit adjustments for purchase orders. One of Cognizant's clients manages a chain of hospitals spread across the New York area. This company draws from a supplier network of over 500 manufacturers for items like bandages, syringes, and masks. All orders are entered and managed through the PeopleSoft ERP application. PDF Purchase Order Automation TABLE OF CONTENTS Introduction to Purchase Order Automation #03 Overview #04 Purchase Order Automation Process #05 The Four Steps of Purchase Order Data Capture Process #06 Features of the Purchase Order Capture System #07 Duplicate PO Detection #09 Archive and Audit #09 Automatic Reminders #08 www.bautomate.com [email protected] PDF Graduate Management Project: A Qualitative Case Study on the ... This project presents contemporary thoughts on the merits of the implementation and effectiveness of a new'purchase order automation system. This case study reviews the steps taken to implement this system and the lessons learned along the way. Information is presented on the conditions, methods, objectives, and problems associated with this ... Purchase Order Automation: A Better Workflow with Mobile POs Reduce errors: Minimize mistakes with automated data entry and validation. Improve collaboration: Foster better communication between field crews and procurement teams. Case Study Highlight. Our client's parts and project teams produced large purchase orders on a daily basis in order to procure product for inventory and jobs. Order Processing Automation Case Study Description of Problem. The client receives lots of orders from hundreds of customers daily. They originally have a department to process orders manually (around 5 persons). Information about end-customers' orders need to be entered into their ERP (Enterprise Resource Planning) system to create Sales Orders. Orders come in different ways: Role of Automation in Purchase Order Accuracy & Compliance Support Suppliers. Automating purchase ordering process not only helps to systemize your business, it also helps your suppliers, vendors, and clients to operate efficiently. Suppliers can receive automated Purchase Orders promptly, which in turn helps your supply chain process more efficiently, and you can ensure that clients will receive a ... A streamlined purchase order process is essential for operations The purchase requisition is an internal document created by a department requesting the procurement of goods or services. This step is crucial as it lays the foundation for the entire purchase order process. Purchase requisition starts with authorization.The purchase requisition must be approved by relevant authorities within the organization, ensuring that the purchase is necessary and that ... assignment essay homework paper phd report resume review speech thesis