The complete guide to Purchase Order tracking

Purchase order tracking is the methodical process of monitoring and managing the lifecycle of purchase orders from creation through to completion. It's a fundamental part of business operations that ensures orders are placed, processed, and fulfilled efficiently and accurately. 

As businesses grow, the ability to scale the purchase order tracking system becomes one of the most important components of a growing business, directly impacting operational efficiency, compliance, and financial auditing—and these improvements can start at Intake, the original point of a purchase request.

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In this article, we’ll take a look at the purchase order process and how to track POs, the importance of scaling your purchase order tracking system as your business grows, best practices, pitfalls to look out for, and how procurement orchestration software Zip can help accelerate your PO and approval process at any stage of growth.

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What is a Purchase Order tracking system?

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A PO tracking system is a structured, technology-driven approach designed to monitor and manage the journey of every purchase order within an organization. 

Historically, this process was predominantly manual, involving the creation of at least two copies of every purchase order—one kept for internal records and the other sent to the supplier. 

While this method originally helped with diligent record-keeping for operational efficiency, today there are better options. 

With advancements in procurement and supply chain management platforms, purchase order tracking software has evolved significantly to automate and streamline these processes, reducing manual labor and minimizing errors across fully-orchestrated procurement workflows.

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What is the best way to track a purchase order system? 

Tracking purchase orders can be achieved through various methods, each with its specific advantages and disadvantages. There are several ways to create purchase orders, purchase requests, purchase requisitions and manage 

Excel and financial spreadsheets

Many businesses start with Excel or other financial spreadsheet software to organize and track their purchase orders. These platforms allow for the creation or downloading of PO tracking templates, which can be stored and managed digitally. Excel offers flexibility and ease of use, making it a go-to choice for many small to medium-sized businesses.

Pros:

• Accessibility: Excel is a widely used application, familiar to most users, making it an easily accessible option for small businesses.
• Customizability: A purchase order template can be tailored to specific business requirements, offering flexibility in how purchase orders are tracked and reported.
• Cost-effectiveness: For businesses with a limited number of purchase orders, Excel provides a cost-effective solution without the need for additional software purchases.

Cons:

• Prone to human error: Manual data entry is susceptible to errors, which can lead to inaccuracies in tracking and financial reporting.
• Scalability issues: As a business grows, managing purchase orders through spreadsheets can become unwieldy and time-consuming.
• Lack of real-time updates: Excel does not offer real-time updates or automated notifications, potentially leading to delays in the procurement process.

Automated PO management systems

For businesses seeking to enhance efficiency and accuracy in purchase order tracking, automated purchase  order management systems represent a significant advancement. These systems automate the tracking process, offering real-time updates, automated purchase order approval workflows, and comprehensive reporting capabilities.

Pros:

• Efficiency: Automation reduces the time and effort required to track purchase orders, streamlining the procurement process.
• Accuracy: Automated systems minimize the risk of human error, ensuring data integrity and financial accuracy.
• Real-time visibility: Stakeholders have immediate access to the status of purchase orders, improving decision-making and responsiveness.

Cons:

• Implementation cost: Automated systems may require an upfront investment, which can be a barrier for smaller businesses.
• Learning curve: Implementing a new system may require training for staff, impacting productivity during the transition period.
• Complexity for simple needs: For businesses with minimal procurement needs, an automated system may not yet be unnecessary.

Automated PO management systems address many of the upstream issues associated with purchase order tracking. 

By offering a "single front door" for procurement, platforms like Zip establish standardized rules and workflows for purchase orders, ensuring compliance and enhancing control over the procurement process. 

The Intake-to-Pay approach, in particular, streamlines the initial stages of procurement, addressing challenges before they escalate, and fostering a more efficient, transparent procurement lifecycle.

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Purchase Order tracking best practices

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Achieving excellence in purchase order tracking demands adherence to a set of well-defined best practices. These guidelines not only streamline procurement workflows but also ensure that purchase orders are handled efficiently, accurately, and in compliance with organizational policies. 

Here are the best practices for refining your po tracker and related tracking methods:

Develop a consistent Intake process

Implementing a single entry point at Intake is a great way to ensure an effective purchase order. This centralizes the procurement process, making it easier for stakeholders and departmental leaders to navigate. This unified approach minimizes confusion, streamlines requests, and ensures that all purchases are justified and authorized according to company policy.

Establish clear tracking processes

Clear guidelines for purchase order numbering and filing systems will set you on the path for success. A well-structured system aids in quick retrieval, auditing, and tracking of the PO lifecycle, reducing the risk of PO number mismanagement and loss of important documents. 

Utilizing a purchase order template, a purchase order tracker, and other standardized forms can further enhance this process. It should go without saying, but be sure to include a way of tracking the order date, order number, order status, payment terms, and delivery date in your PO process tracking system.

Utilize online tools, as needed

Online tools and software solutions offer real-time access to electronic purchase order data, enabling stakeholders to monitor and manage orders effectively from anywhere. These tools often come with features like electronic signatures, notifications, and approval workflows, which help streamline procurement operations, all of which saves time and resources.

Consistently update and review Purchase Orders

Regularly updating the status of purchase orders and conducting reviews ensure that any discrepancies or issues are promptly identified and addressed. This practice helps keep track of purchase orders, and maintain the accuracy of procurement records, ultimately supporting effective inventory and vendor management.

Implement automation

Automation technology can significantly reduce the workload associated with purchase order tracking. From automated approval workflows to AI-powered insights and analytics, these solutions can transform procurement processes, making them more efficient, less prone to error, and scalable as business needs grow.

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Common Purchase Order tracking pain points

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Even with the best practices in place, businesses often encounter several challenges that can impede the effectiveness of their purchase order tracking processes:

Spend plateaus caused by poor integrations

Integration issues between ERPs and other procurement tools can lead to spend plateaus, especially when systems are not designed to accommodate service spend or have poor intake processes. These limitations can restrict the visibility and control over procurement spend, especially with traditional purchase orders not designed for modern systems

Opportunities for human error

Manual processes are inherently prone to errors, whether it's incorrect data entry, misinterpretation of information, or loss of paper-based documents. These errors can lead to financial discrepancies and compliance issues—fortunately implementing po software can help mitigate these issues.

Tedious manual tasks

Manual purchase order tracking involves time-consuming tasks such as data entry, order verification, and document filing. Manual purchase order creation can drain resources and distract from more strategic procurement activities. It’s worth investigating modern solutions to automate these processes.

Process bottlenecks

Bottlenecks often occur in approval workflows, document processing, and supplier communication, leading to delays in the procurement cycle and affecting overall operational efficiency.

Inconsistent tracking processes

Lack of standardization in purchase order tracking can result in inconsistent processes across teams, making it difficult for your purchasing department to maintain control and visibility over procurement activities.

Inaccurate data

Inaccurate or outdated data in the purchase order system can lead to incorrect order placements, inventory mismatches, and financial discrepancies.

Costly

Inefficient purchase order tracking processes can be costly, requiring additional resources to rectify errors, manage inventory discrepancies, and handle supplier disputes.

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Key features to look for in a Purchase Order tracking solution

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When selecting the right purchase order tracking solution, it’s important to consider your needs and determine which pain points you’re looking to solve for. Fortunately, there are great solutions on the market today that solve for modern procurement requirements of businesses at any scale.

Be sure to look out for these necessary features.

• Intuitive Intake-to-Procure process: A user-friendly interface that simplifies the procurement process, from request to approval and order placement, enhances adoption and compliance.‍
• 3-Way Matching: This feature ensures that purchase orders, receipts, and invoices match, helping prevent overpayments and fraud.‍
• Real-time reporting and tracking: Access to real-time data enables stakeholders to monitor the status of orders, manage inventory more effectively, and make informed decisions.‍
• Role-based permissions: Implementing role-based access controls ensures that sensitive procurement data is securely managed and accessed only by authorized personnel.‍
• Vendor collaboration: Tools that facilitate direct communication and collaboration with suppliers can help streamline negotiations, resolve issues quickly, and foster stronger supplier relationships.‍
• AI-powered insights and analytics: Leveraging artificial intelligence to analyze procurement data can uncover trends, identify savings opportunities, and inform strategic decisions.

By incorporating these best practices and features into your procurement strategy, you can overcome the common challenges associated with purchase order tracking, streamline your procurement process, and position your organization for scalable, long-term success.

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Improve the procurement process with Zip

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When it comes to procurement and Purchase Order management capabilities, Zip is pioneering what is possible with technology. As a cutting-edge, AI-powered solution designed to streamline and enhance every facet of PO management, Zip offers several unique benefits to companies of any size.

• Automated data extraction
  
  ‍Zip leverages advanced AI-driven tools to automate the extraction of key data from purchase orders and related documents. This innovation drastically reduces the need for manual data entry, minimizing errors and freeing up valuable time for your procurement team.

• Painless PO adoption
  
  ‍The platform's intuitive intake process ensures that POs aren't just created; they're crafted to align with your policy effortlessly. By capturing essential data right at the request stage, Zip automates PO creation, enabling a seamless adherence to procurement policies without any friction for employees.

• Simplify Accounts Payable (AP) visibility
  
  With Zip, the bridge between procurement and finance has never been stronger. All necessary data flows effortlessly across Zip, from the initial request through to accounting and payment processing. This seamless integration ensures that the finance team has all the information they need, right at their fingertips.

• Unlock powerful insights
  
  ‍Beyond mere transaction processing, Zip provides access to detailed spend and performance data, empowering your procurement team to control budgets effectively. With line-level detail at your disposal, identifying actionable savings opportunities becomes a straightforward task, enabling more informed decision-making and strategic procurement planning.

By adopting Zip's AI-powered solution, your organization can leverage these key benefits to not only streamline procurement processes but also unlock new levels of efficiency and insight. The future of procurement is not just about making do; it's about doing more with less, and doing it smarter.

To experience firsthand how Zip can transform your procurement process, we invite you to request a demo today. 

Discover the difference of streamlined, intelligent procurement orchestration and propel your organization towards procurement perfection with Zip.