Purchase Orders Helping To Control Costs

Manage multiple vendors that supply the same item.

Small business owners often make a fatal mistake; they’re so focused on increasing sales that they fail to manage their costs. Business owners work hard to drive sales and spend most of their time in product development, customer relationship management, sales automation, and sales force management. This is great if you balance this with cost controls designed to minimize overhead and limit the cost of purchasing inventory.

Purchase order management software allows you to manage multiple vendors that supply the same item. Each vendor may offer different pricing strategies based on quantities and lead times. So when it’s time to purchase inventory for your warehouse you can make the correct choice. The objective is to buy the minimal amount of inventory to keep in your warehouse but keep a level that ensures customer orders can be fulfilled. That’s why vendor costs weighed against delivery lead times are so important.

If you’re not issuing purchase orders now, you’ll find it very difficult to ensure that vendor invoices convey the exact quantities ordered against the exact amount received into your warehouse. By using a purchase order management system not only are you directing the vendor how much you’ll pay for an item, you’re also informing your warehouse how many items they should receive. The warehouse uses a module of the warehouse management system to receive items in against purchase orders. You’ll have to decide in advance whether you’ll allow substitutions or over-shipments so that these rules can be followed when receiving in your POs.

Many times multiple shipments are recorded against a purchase order. Your vendor should only bill you for the items shipped against your purchase order. So it’s important to match invoices against the price agreed to for the item on the purchase order as well as the quantities received by the warehouse.

Zenventory web based inventory management software provides all of these checks and balances for you. It is much easier to use than most common accounting packages that have been glued together over the years. Since Zenventory is web based you can feel free to use it wherever your business takes you. Issue a PO on the road if you need to. With unlimited users and unlimited workstation, your front office and warehouse can help you control costs by using Zenventory to manage vendors and inventory. Contact a Zenventory Zensei to learn more or to set up a demo. Call directly at 1-800-268-6296 or email us at support@ubiquia.com.