Written by James Tullai, One Step Implementation Specialist
Oftentimes I work with clients who don’t enter Purchase Orders into their POS system. When I ask why the most common responses are that it takes too long, they don’t have the time, or they have a quick turnaround from when they place the order to when the merchandise arrives. Creating PO’s might seem like a lot of work, but the reality is, they save you time and money.
Here are 8 Best Practices and reminders as to why it is important to find the time to properly process Purchase Orders.
- Enter the Purchase Order Right Away. Don’t wait several days or weeks to enter a PO. This will allow your associates to see what’s coming and when it will arrive. It will allow your associates to better assist customers who request out of stock merchandise.
- Budgeting. All PO’s will have billing terms and ship dates. Use these when creating orders to avoid vendor invoice surprises at the end of the month. Also, if you know when a large shipment is due for delivery, you can schedule extra personnel as needed.
- Expedite the Receiving Process. Receiving merchandise against an existing PO will expedite the receiving process and allow you to place the items on the floor faster especially if these are new items.
- Reduce Receiving Errors by Receiving Clerk. Many POS systems will not allow you to receive more items than what is on the PO thereby creating a check and balance to reduce receiving errors. If you have not entered the PO into your system, you will have lost that double check ability.
- Use “Cancel Date” on Purchase Order to your Advantage. If merchandise is date sensitive, you have the right to refuse shipment if it arrives past the cancel date. This is especially useful for seasonal and holiday items. This way you won’t get stuck with merchandise you can’t sell: swimsuits in January or Christmas sweaters in July.
- Track Vendors Fulfillment Rates. Use this as leverage for future bargaining with a vendor. Vendors are notorious for under shipping or delivering the wrong items. PO’s will show you what you originally ordered so you can compare it to what was shipped. You can use this to your advantage and request a discount on your next order by showing your vendor incorrect shipments on past PO’s.
- Prevent Over-Buying by using an Auto Replenishment. Many POS systems will have an auto-reordering tool that uses a minimum quantity you set as a reorder amount. Some systems may even suggest a quantity based on past sales. This will help you order what is actually selling and not what you think is selling.
- Clean up Old Orders. Review open Purchase Orders on a weekly or monthly basis, depending on the type of merchandise you sell. Deleting/Inactivating old orders will free up money for Open to Buy.