How to Speed up Your PO Process

Efficient procurement processes are crucial for maintaining smooth operations and healthy business relationships. One key element in this process is the purchase order (PO).

What is a Purchase Order?

A purchase order is a contract issued from a buyer to a seller for specific goods. While there are 4 types of POs, the most common type is the Standard PO, which is typically used for one-time purchases.

Key Components of a Standard PO

When CPG brands send out POs to retailers, they include the following essential information:

• Date
• Products needed and their quantities
• Product details (SKU numbers, model and brand names)
• Price of each product per unit
• Delivery date
• PO number
• Business information (shipping & billing address, company name, and contact information)
• Payment terms

Your PO doesn't need to be fancy, and you’d likely be surprised by the number of established brands you see in the bodega use a simple Excel spreadsheet for their PO. You can make your own PO on Excel or download this template to get started.

Why is it important to have an efficient PO process?

A slow or inefficient PO process can harm your business and slow down the entire procurement process. According to the APQC's Open Standards Benchmarking for PO Cycle

• Top-performing companies average 5 hours or less to place a purchase order with their suppliers.
• Bottom-performing companies average 48 hours for the same process.

The benefits of having an efficient PO process include:

1. Time savings: A faster process means less time spent on administrative tasks.
2. Improved supplier relationships: When POs are received faster, they can be processed and paid faster, leading to happier suppliers.
3. Enhanced procurement efficiency: A quicker cycle allows for more agile responses to market changes or internal needs.

Understanding and optimizing your purchase order process is crucial for CPG brands. By ensuring your POs are comprehensive, timely, and efficient, you can improve your overall procurement process, save time, and foster better relationships with your suppliers. It’s not about having the fanciest PO system – it's about having one that works effectively for your business needs.