How to speed up your PO cycle time
1. Automate, automate, automate
Automation speeds up the purchase requisition by giving both users and approvers instant access to any request/order in the system. Technology can generate instant reports as well, allowing you to track, monitor and analyze your business costs on the fly.
But most important, technology can provide you and your team with greater visibility and control over cycles and approvals.
An automated process provides:
- Cost savings: your company and employees can save time (and sanity) by avoiding manual, menial tasks. Instead they focus on more value-adding activities. Back in 2014, the overall average processing cost was $411 according to CAPS Research.
- Greater visibility: having visible spending will go a long way, allowing businesses to manage its cash flow effectively.
- Better control: those requesting payment will only be presented with approved cost centers and accounts, giving your finance heads greater control.
- Increased accuracy: you eliminate opportunities for errors such as double-entry. In addition, rules within the tech platform can prevent routine mistakes.
- Compliance: the workflow can be configured to your business rules and amenable to your purchase order and supplier / vendor policies.
Some examples on how to leverage technology to shorten approval chains and gain control over your process:
- Initiate contracts with suppliers for specific items so they’re “pre-approved”.
- Set budgets to be visible to employees, and see how different teams and departments are going against the budget.
- Add 2-3 more people to the process as watchers instead of approvers. That way, no one is holding up the process, and watchers can jump in when a problem is present.
- Set-up workflows
2. Supply Chain Optimization
Nowadays, the supply chain is a complex ecosystem of people, processes and technologies.
Before, big businesses and enterprises would want to consolidate their supplier base, negotiate stronger contractual discounts, and encourage employees to purchase from this preferred shortlist of vendors. But with highly volatile fluctuations for products, supplier consolidation might not be best. Instead you’ll want supplier diversity.
Optimization, however, requires analysis of supplier spend, capabilities and performance, while still maintaining quality. Review your core strengths and outsource all other activities to your specialized supplier partners.
Improve fulfillment rates and product availability at point of purchase and ensure a lean supply chain improving margins and profitability. Today, technology allows for collaborations and real-time responses.