Purchase Order Management: The most important step to effective inventory management

Purchase Order Management

A purchase order is an official contract between the supplier and a business for the purchase of goods and services. It ensures that the supplier delivers assured quality and quantity of goods and services in the given time frame. Purchase order not only eases the purchasing process but is a fantastic tool to simplify the workflow of your wholesale inventory management system.

It helps to maintain accurate and complete financial records and track the expenses of your business. A well-managed purchase order system can significantly improve the efficiency of your inventory management process.


Elements of a purchase order

Some of the important elements that define a complete purchase order are given down below: 

  • Name of the supplier and the business:
    The primary thing included in the purchase order is the name and address of both the parties involved in the transaction. 
  • Purchase order number:
    It is a unique reference number generated for every purchase made by the organization. It helps in faster scanning of the products ordered and delivered and minimizes the risk of inaccurate payments. 
  • Purchase order date:
    It includes the date of purchase and delivery of the goods.
  • Address of the delivery:
    The address where delivery is to be done must be mentioned in the purchase order. 
  • Description of the goods or services:
    Comprises all the details of the products from their quality, quantity, and technical specifications. It reduces the risk of the inaccurate delivery of the goods.  
  • Payment information:
    It consists of all the information related to the price of your order, including the taxes.   


Why are purchase orders necessary for inventory management

The purchase orders provide an integrated approach to the inventory management software and system. Using purchase orders, your organization can avail of the following benefits:

Saves your time

A functional purchase order system eases the ordering process and saves plenty of time for the organization. The complete process from ordering to delivery becomes faster as you only have to verify the details of the products in wholesale business management software.  

Enables you to plan

Purchase orders make it easier to access the data. Its intelligent use can offer crucial insights into the business’s performance. By examining product trends, the company’s spending, and market cycle, you can plan wisely for the future. 

Easier to track orders

Tracking the order’s progress at different stages becomes more streamlined with the use of the purchase order. All you have to do is enter the PO Number, and every detail related to the order will appear before you. 

Prevents miscommunication

Miscommunication is one of the biggest issues that companies face in their business process. Many times orders get mixed up, and the deadlines have to be extended due to misinterpretation of the information. With purchase order in use, these issues get avoided as an automated record is available with both parties.

Provides legal protection

A purchase order acts as a legal document. It provides a written agreement to both the parties about ordered products along with their prices. So the supplier and the buyer both have to stay honest in their transaction. It saves you from problems like unexpected price hikes and deliverance of wrong items in the order.

There are many purchase order management solutions available in the market, however, we recommend you to explore Ordercircle’s solution, which is one of the leading software.


Process flow of the purchase order

The process of purchasing the goods/services is referred to as a purchase order process flow. A well-executed process flow helps avoid delays and keeps the purchasing team updated about the order. The steps involved in the overall process are as follows:

  1. Creation of the purchase order. 
  2. Sending quotation requests to multiple vendors.
  3. Analysing and selecting the vendor. 
  4. Negotiating with the vendor and sending a purchase order. 
  5. Receiving goods and services.
  6. Receiving and verifying the invoice. 
  7. Authorizing the invoice to pay to the vendor. 
  8. Maintaining the record.
  9. Closure of the purchase order.

How Purchase Order Management (POM) simplifies inventory management

The work of your inventory management system gets simplified with the use of an efficient POM system. It enables you to: 

  • Create and revise purchase orders directly from your B2B inventory software
  • Add order items through the same software interface using scanners. 
  • Email the purchase order to the vendor. 
  • Complete the workflow of the ordered items.
  • Update any outstanding orders. 
  • Track the progress of your order. 
  • Generate reports of the ordered goods.
  • Develop forecasts for reordering of the items. 
  • Swift and error-free audits of all the orders received by the company.  


Benefits of using an automated Purchase Order Management software

There are several perks of using a powerful automated purchase order system. Some of them are given down below:

● Fast and smart workflow

The software automates the work process and accelerates purchase requisitions. Moreover, it prevents data redundancy and helps in the ordering of the goods from within the system. 

● Complete control of purchase management process

Purchase order management system offers you control of the entire procure-to-pay process. It consists of customizable purchasing dashboards that help compare and check the price of goods. 

● Higher efficiency with better profitability

POM software helps you save money as they search for your preferred suppliers to provide you with the order. Additionally, some software even provides insights on which supplier you must select for the order. 

● Different accessing options for multiple users

You can add and designate different users for their specific work on the system. They will only be able to access the information related to their part of the job. This prevents any fraudulent activity in the organization. 

● Stock maintenance and adjustments

Maintaining the stock records becomes extremely simple with a B2B wholesale purchase order management system. You can record stock wastage, goods production, and raw material consumption using a single interface. 

● Organization of product batches

The POM software provides you with the feature to organize goods in distinct batches. The manufacturing date, expiry date, and batch number gets specified and stored in the system. 

● Support for multiple currencies

If you consistently trade with a vendor outside your country, this feature will surely be of extreme value to you. It automatically converts the international currency value to your local unit and can even generate reports on loss or gain due to currency fluctuations. 

We recommend you to explore Ordercircle’s solution, which provides you all the above-mentioned benefits and many more.


What makes a manual POM different from automated POM?

The major distinction between a manual and automated purchase order management system is the ability to process more quickly and efficiently. Check out the given table for better understanding:


Manual POM Automated POM
  • Lack of visibility
  • Fully transparent
  • Slow purchase order processing-cycle
  • Accelerated purchase order processing-cycle
  • Dependency on people
  • Automated. Machine operated
  • Compliance Issues possibilities
  • Zero compliance issues
  • Low accuracy and probability of human errors


  • High accuracy and zero errors



A powerful purchase order management system is of great value in managing your inventory process. There are many solutions available in the market, however, we recommend you to explore Ordercircle’s solution, which is one of the leading software. By streamlining the entire procurement process, the workflow time and the risk of inaccuracy is reduced. By easily integrating with your inventory management system, it enhances the system performance and helps deliver higher work productivity.

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