A purchase order management system should be part of every company’s procurement process, but in reality it’s often an inefficient and disorganized task. And that can cause mistakes and overspending.
If you’re working in an SMB it’s likely that you have an informal purchasing system. Perhaps staff just send a quick message to an administrator asking for supplies, or maybe they pick up the phone to place the order themselves – especially if your company has established relationships with regular suppliers.
In this article we’ll show you how to make this system more organized. You will learn how to create a simple and effective purchase order management system with our free purchase order management template in Google Sheets.
Why use a purchase order management system?
Things can get tricky once your business starts to grow. As the number of suppliers and the volume of orders increases, you need some kind of system in place to ensure accountability and accuracy.
Purchase order (PO) management becomes extremely important when you have complex or customized orders. The order request may contain many different details such as the number of units, technical specifications and other special information. Without a purchase order system you rely on a chain of verbal or written communication – and that’s problematic when things go wrong. Especially for the person who placed the order.
A purchase order management system is indispensable for tracking expenses and keeping spending on budget.
Imagine that you place an order with a supplier, on the phone. On the day the shipment arrives, a colleague receives the delivery but the invoice shows a higher price than the original quote you received. Certain items are missing from the delivery and some goods arrive damaged. Unless the same person places the order and receives the delivery (which is unlikely) it takes time before anyone spots these discrepancies and mistakes. By this point, the invoice may have already been processed and it’s more difficult to raise a dispute with the vendor.
Overpayments or duplicated payments are some of the common spending mistakes that can be avoided by tracking purchase orders effectively.
Within your company or organization, an organized purchase order management system also reduces the need for time-wasting emails and calls. With a manual system or no system at all, it’s easy to buy unneeded items – or leave your teams without key resources.
Did your colleague already place the order? Maybe you ordered “two” boxes on the phone but the person in the office thought you said “ten”.
Communication problems and the absence of a purchase order management system are a recipe for trouble.
Using a PO management system helps ensure:
- Better spending control
- Less risk of over-purchasing
- Damaged or incorrect deliveries are logged
- Staff can place order requests simply and easily
- You can easily compare and evaluate suppliers
- A clear audit trail for bookkeeping
Say goodbye to stockpiles or shortages…
How does a purchase order management system work?
SMBs sometimes avoid purchase order systems because they are worried about generating more paperwork. And it’s true that standard purchasing and procurement systems can be a little behind the times. The ordering, shipping and delivery of physical goods still tends to bring with it a mountain of paper invoices, packing slips and delivery notes.
But a modern purchase order management does not have to mean inefficient paper processes – we’ll show you how you can get all the benefits of a purchase order system without a single additional piece of paper, by creating a digital purchase order management system. You can do all this, for free, using the tools you already know: spreadsheets.
No need for special software.
To help you get started with your own PO management system, we’ve designed a free purchase order management template for you to use in Google Sheets.
Here’s what the system looks like:
- At the heart of the system is the purchase order manager. This is the person responsible for placing orders. Of course, in SMBs this task may not fall to one single person. But let’s think of this as the center of our system.
- The purchase order manager keeps a list of vendors: a supplier register.
- People in the company who want to order things make an order request. They send this request to the purchase order manager
- Once the company receives the delivery of goods, the purchase order manager registers this in orders received.
- The purchase order manager has a clear record of all orders requested and received. Topped off with a visual dashboard in his spreadsheet.
Why use a purchase order management template?
You don’t need expensive or specialist procurement management software to start streamlining and managing your purchase orders. It’s possible to create an effective purchase order management system using one tool: spreadsheets. That’s why we’ve created a free purchase order template in Google Sheets to help you:
- Collect order requests from different colleagues and departments – in one place
- Keep a register of suppliers – and special information about them (e.g. discounts or special conditions for orders)
- Record all orders received, including date, delivery time and condition (e.g. number of damaged goods)
- View key order metrics in a dashboard – at a glance
In one single spreadsheet.
What do I need?
We’ve created a free template for you in Google Sheets so all you need is a Google account. It’s completely free.
Using our ready-made, standalone template you just enter the data and our spreadsheet does the work. Easy. We’ve already written the formulas for you.
- Free standalone purchase order template
- No need for special procurement software
- Easy to use – in Google Sheets
How do I use the purchase order management template?
When you click the link to get a copy of the template, it’s saved to your Google Drive and opens automatically. It’s ready-to-use so you can start entering your data straight away.
In the first tab you will see step-by-step instructions. We’ll outline them here too.
Go to the Suppliers register (Input) tab. We have provided some dummy data as an example so you just overwrite this with your own information. Start entering your list of suppliers, their contact details and the product category. In the notes column you can record any specifications relating to that supplier, such as minimum order volumes or special discounts. Don’t write in the grey cells – the template will generate a Supplier Code for you automatically.
In the Consolidated orders tab (the green one) fill out all the order requests you receive. The order number and order cost (columns with grey cells) are generated automatically.
When you receive orders (deliveries) in the warehouse, register them in the Orders received (Input) tab. This data is useful to show you, for instance, which supplier has orders outstanding. Column B (Order number) populates automatically from the Consolidated orders tab so you don’t need to touch it.
Consult your Dashboard (the final tab) for a clear overview of key purchase order metrics including total orders vs. orders received, or complaints per supplier. You will see a padlock symbol in this tab – the template generates the graphics automatically from your data: you don’t need to do anything!
Your purchase order management system is now up and running. You’ve got a simple and clear overview of which orders your colleagues have placed, and the status of orders received. Use this information to track your orders and evaluate suppliers. All in one place.
Working in a large team with multiple spreadsheets?
Get an automated Purchase order template with Sheetgo
Do you need a more collaborative solution than one single spreadsheet?
Would you like each department or team to have their own spreadsheet for tracking orders placed or orders received? We can help.
Use our automated Purchase order template. With Sheetgo you can connect spreadsheets from different colleagues or departments to your own master sheet. Each team updates their own spreadsheet(s) and you can view the results all in one place.
And the best part? The data flows automatically.
The Sheetgo template streamlines and automates your purchase order management system. You can:
- Create a simple and efficient system for staff
- Give individual colleagues or departments their own spreadsheets for placing orders
- Ensure privacy: only the purchase order manager can view all company orders and spending in the master sheet
- Save time and manual work – no more calls or emails to place orders with the purchase order manager
- Get automated updates, when you want them
You are on your way to creating an automated purchase order management system with Sheetgo in Google Sheets. Feel free to customize and adapt the template to suit your company’s needs. Read more about how to automate your business processes here.