Purchase Order Management:
5 Reasons to Rethink Using Spreadsheets
Many companies have invested heavily in digital transformation initiatives in pursuit of increased competitiveness and improved efficiency. In 2020 alone, businesses worldwide spent $1.3 trillion on digital transformation.
Generally speaking, digital transformation involves leveraging various technologies to improve existing business processes or create new, more efficient ones.
Virtually any business process can be enhanced or improved upon by augmenting it with leading-edge technologies. A prime example is spreadsheet-based purchase order management.
If your organization has been exploring ways to jumpstart its digital transformation efforts and become more efficient, replacing your spreadsheet purchase order tracking with a modern alternative is a great place to start. Here are 5 reasons why:
1. Spreadsheet Purchase Order Management Is Inefficient
Managing purchase orders with spreadsheets is incredibly inefficient. Depending on the size of your company and the number of purchase orders you process, your team may be wasting hundreds of hours per year updating spreadsheets. Wouldn’t you rather have your team spend their days working on dynamic tasks?
Simply replacing spreadsheets with a digital purchase order management solution could eliminate this major barrier to productivity. Freeing up even a few hours per week could have a positive impact on your company’s profitability.
There are several reasons why using spreadsheets for purchase order management may be inefficient:
- Data entry errors: manual data entry into spreadsheets is prone to errors, which can lead to incorrect orders being placed and resulting in costly mistakes.
- Limited visibility: spreadsheets do not provide real-time visibility into order status, making it difficult to track and manage orders.
- Limited collaboration: it can be difficult to share and collaborate on spreadsheets with multiple team members, resulting in inefficiencies and delays.
- Limited security: spreadsheets are not as secure as dedicated purchase order management software, and there is a risk of data loss or unauthorized access.
- Limited scalability: as a business grows, the use of spreadsheets for purchase order management becomes increasingly inefficient and time-consuming.
2. Using Spreadsheets Creates Data Silos
Are all of your organization’s purchase order spreadsheets managed by the same individual? Unless your company is quite small, the answer is “probably not.”
Frequently, various departments or team members will create and manage their own spreadsheet files. The problem with this approach is that it creates data silos and increases the chance of discrepancies or errors.
Typically, data silos are created when the various applications that your organization uses do not effectively share information. However, the decentralized use of spreadsheets can also create a form of data silo.
As they pertain to purchase order management, data silos can hinder transparency between accounting and sales departments. These silos can also make it difficult to keep track of purchase orders, which will negatively impact budgeting and fiscal management processes.
3. Manual Purchase Order Tracking Kills Morale
Manually tracking purchase orders via spreadsheet software is time-consuming, tedious, and redundant. As a result, employees who are tasked with manual purchase order tracking may experience a drop in morale. This decreased morale is particularly likely if they spend a large portion of their work week on these tasks.
Over time, low morale can decrease employee productivity. Prolonged lulls in morale can also reduce job satisfaction and potentially increase turnover. Naturally, high turnover rates can increase hiring and recruiting costs, lead to lower profits, and negatively impact business continuity.
4. Discrepancies and Errors Can Lead to Lost Profits
Speaking of lost profits, tracking purchase orders via spreadsheets can lead to more frequent data entry errors or discrepancies. In turn, these errors can hurt profitability in several ways. Errors regarding the number of items being bought or the agreed-upon purchase price can be particularly detrimental to business operations and profitability.
In the ultra-competitive modern business environment, your organization must do all that it can to protect profit margins and cash flow. Accomplishing these objectives will require you to do much more than simply transition to digital purchase order management.
However, optimizing purchase order management and tracking can definitely enhance the efficacy of your other cash flow optimization efforts.
Discrepancies and errors on spreadsheet-based purchase orders can lead to lost profits in several ways:
- Incorrect orders: if there are errors in the data entered into a spreadsheet, it can result in incorrect orders being placed. This can result in the purchase of incorrect or unnecessary items, leading to lost profits.
- Delayed orders: if there are errors in a purchase order, it may take longer to resolve the issue and place the correct order. This can lead to delays in receiving necessary items, which can disrupt business operations and lead to lost profits.
- Overspending: if there are errors in a purchase order, it may result in overspending on items that are not needed or that are more expensive than necessary. This can lead to lost profits due to unnecessary expenses.List Item
- Loss of vendor relationships: if a business repeatedly places incorrect or delayed orders due to errors in their purchase orders, it can lead to strained vendor relationships and potentially lost business opportunities.
5. Digital Purchase Order Management Will Give You a Competitive Edge
To recap, digital purchase order management will help you reduce the number of hours your team spends tracking orders, can lead to fewer data entry errors, will improve employee morale, and can eliminate data silos.
You will free up your staff to tackle emerging challenges and can manage purchase orders with greater efficiency. Cumulatively, these benefits will give your organization a competitive edge within your industry.
But how exactly do you go about phasing out spreadsheet-based purchase order practices in favor of modern alternatives? The most pragmatic solution is to adopt a comprehensive transportation management system (TMS) like the one offered by R2 Logistics.
R2 Logistics’ TMS is one of the most dynamic solutions on the market. In addition to facilitating digital purchase order tracking, our platform also includes a wealth of tools that you can use to improve your supply chain management capabilities. Schedule your free demo or request a quote today to learn more.