Published: June 18, 2025  Updated: June 13, 2025

Effective Purchase Order Management for Business Success

Every company engages in purchasing, from acquiring inventory for sale to securing equipment for operations and maintaining necessary supplies. To maintain fiscal responsibility, businesses establish a purchasing process or management system. Given the variations across industries and companies, the central question becomes: how does one have effective purchase order management for business success? Let's delve into this process and explore valuable recommendations.

Understanding the Purchase Order Process

Individual companies develop unique versions and procedures for each step in their purchasing. Often, purchasing involves multiple stages, including an approval workflow we'll discuss later.

Initiating Purchase Requests

Many acquisitions start with a request. Employees might submit these requests verbally or in writing. Subsequently, evaluating the urgency of these requests demands specific skills. Prioritization hinges on factors like necessity and budget.

A request might gain verbal or written consent, yet maintaining documentation benefits both records and the accounting department. For numerous organizations, a computerized maintenance management system (CMMS) serves as a central hub for both requests and the subsequent purchase order phase. For example, the system administrator can configure an approval sequence where a supervisor or manager must authorize the request or order. Upon managerial approval, the process advances.

Creating and Submitting Purchase Orders

How does a purchase order originate? Methods include phone calls, emails, and written lists. Consider these examples: phoning a local pizzeria to order food delivery or providing a list of needed items to a local hardware store. If the hardware store lacks certain items, the manager submits a purchase order, likely through their company's software.

Each company dictates the necessary information for purchase order submission. A CMMS presents numerous options to accommodate these requirements.

Boosting Purchasing Efficiency with a CMMS

Vendor Information Management

The CMMS can supply significant, useful information to aid in creating your vendor list.

Using Blanket Purchase Orders (BPOs)

This CMMS feature adds considerable value and efficiency to your purchasing. You compile a list of frequently purchased items from a specific vendor. When generating a purchase order, instead of searching through your general inventory list, you access the BPO and select the required items. A BPO also yields cost savings by enabling bulk orders in a single shipment rather than multiple smaller ones.

Discover how streamlined maintenance processes can elevate production. Learn more.

Department and Cost Center Tracking

A CMMS purchase order form allows you to specify the relevant department for the purchase. Will you allocate the order cost to a particular cost center within the facility? Or did you acquire the part for a specific job?

Automated Purchase Requests

While the CMMS tracks quantities, you might not always notice when certain parts and supplies dwindle. You want to avoid emergencies without the necessary parts. Establish a minimum threshold within your system. When the quantity reaches this level, the CMMS initiates a purchase request, providing ample lead time for delivery.

Cross-Departmental CMMS Versatility

As a database, multiple departments can utilize the same CMMS, including Maintenance, Purchasing, and even Human Resources. This unified database allows you to generate various purchase reports and establish standardized forms for improved organization.

System Integration for Seamless Purchasing

Discuss system integration with your CMMS provider, connecting it with other company systems like accounting. This facilitates information transfer from the CMMS without extra paperwork or generated reports. This also eliminates wasteful dual data entry time and minimizes potential data entry errors inherent in that process.

Centralized Purchasing Organization

A CMMS grants straightforward access to vendor information. With a few clicks, you can find delivery details, track lead times, and note bulk order discounts.

Employing this method standardizes purchasing. It lessens errors, miscommunication, and discrepancies between the requester and the vendor.

Approval Workflow Controls

With a CMMS in place, the purchase request or order can proceed to the appropriate individuals for approval. These individuals can review the details, including who needs the items, the required date, shipping terms, shipping and billing addresses (which might differ), and any attachments. (More on this in the subsequent point).

During the approval process setup, the administrator can define procedures for which purchase orders necessitate approval. These approvals can be based on dollar amounts. For instance, Joe approves purchases up to $500, Mary approves purchases over $500, and Frank approves purchases exceeding $5000, and so forth. A policy might even mandate approval for every purchase to ensure accountability.

Visual Attachments for Order Accuracy

These enhance purchase oversight. Adding them to purchase orders aids in clarifying potential confusion. For example, two parts might appear similar, but one has an extra component. To ensure the correct part arrives, you would attach an image (showing the special component) to the purchase order.

Managing Receiving and Invoicing

A CMMS can refine purchase order management further by handling receiving and invoicing if your system manages these processes instead of separate receiving or accounting procedures.

Insightful Purchasing Reports

The CMMS offers numerous reports relevant to purchasing, such as vendor information, on-time delivery performance, and costs. You can specify date ranges for these reports and generate lists of items bought from a particular vendor or for a specific department within your company.

Smarter Purchase Order Management Drives Efficiency

While labor represents a significant company expense, maintaining diligent oversight of inventory and supply purchasing remains crucial. What does it take to prevent purchasing from spiraling out of control? It demands leadership capabilities to determine optimal purchase timing, identify dependable vendors, and decide on the correct quantities for each order. A well-implemented system contributes significantly to achieving these goals.

A CMMS can aid in refining purchase order management. It organizes vendor information, monitors purchase requests, and simplifies the initiation and submission of purchase orders. Moreover, it assists in processing, receiving, and issuing invoices. This ensures sufficient inventory levels and keeps costs in check. For more information, contact MAPCON at 800-922-4336.