What is a PO

What’s a po, and why do I need one?

A PO, shorthand for a purchase order, it, in its simplest form, a legal document for buying goods or services, simple right? They give you a legally enforceable record of what you ordered, protect you from unexpected price increases, simplify inventory management, manage the suppliers you use, loads of benefits. But why not just email the supplier with what you want? Well. At Zahara we’ve seen the reason why not many times in many different ways, how do you control what the team are buying? And from who? When things turn up how do we know if it’s what we ordered? What if two people ordered the same stuff? Or a mistake was made?

Okay, so I get why I need one, where do I start?

Firstly you need to understand what you need to send to the supplier, finding an example to start with here can be a good idea:  purchase order template so lets go through what’s on every good po:
  • Your business address – you need to be able to identify yourself
  • The supplier name and address – it’s a legal document so needs to be clearly identified
  • Delivery address – You’re not always going to want your goods delivered to the same place
  • Details of who ordered it, along with the date
  • When you would like the goods by
  • The name of each item
  • The quantity of each time
  • The product code of each item
  • The item price, net, gross and tax % you expect to pay (an unexpected VAT addition can be a nightmare)
  • The same for each extra item, plus the totals of each
  • Instructions on where to send the invoice
  • General instructions or terms and conditions
  • Any specific comments to do with the order
  • A sequential PO number, so it can be identified later
These are all simple little bits of information, however they can take time to collect and keep on top of. So how do we get this information – The person who’s raising it won’t have all of it, so they ask around right? But then since they’re asking they might as well ask their manager if they can buy it – Oh actually they need to check with The warehouse manager too, as it might have already been done, and suddenly the whole process ends up, well, a process. Lots of businesses try to manage this with their own internal set ups, traditionally orders would be physically stamped as approved as they went through this process, now this is less common, with Excel, google sheets, and emails often employed in various combinations – However they all have their flaws

So, let’s look at how we want to get these documents approved then?

Sounds great. So who is the first person we’ll want to make sure everything looks right, probably a manager, they’ll be the first in the chain, then we might want to make sure that someone senior, maybe the person who looks after the finances, such as a CFO, knows of any large purchases – say anything over 10K, after that we might want the CEO to know of anything over 20K as that would be a sizeable purchase. Then we might want the ops manager or the warehouse manager to know what we’ve decided, so that they can plan around it. Great we have a process! Order > line manager > CFO > CEO > OPS/WHM, now we just need to make sure that everyone knows who they need to send it to, under what circumstances, and to make sure that they do what they know they should. But here is half of the problem, we’ve all had salespeople who “ just want to get it done”, or production engineers who “need to get the order in today so can’t wait”, just because a team knows what they should do, don’t mean they will.

So, assuming they know the right information and follow the right process, what then?

If the stars align and your team do everything they need to do then all that’s great! Then the admin comes into play – do I need to get this physically signed? Who sends it to the supplier? Where are they stored afterwards? Essentially one massive ongoing job for your administration team. You’ll save time in other tasks, but to get the level of control you’re after, it’s a necessary evil. Unless there’s another way. Zahara is a Perfect PO automation system, automatically filling in the details you need, getting it to the right person, sending it to a supplier, and then filing it away in one tidy piece of cloud-based software. All of the benefits with a fraction of the effort.


How to setup a purchase order process

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