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Purchase Order Confirmation Best Practices

“One of the Envi features that works really well are the confirmations from EDI vendors and the ability to receive invoices electronically. This helps our AP become much more automated and our efficiencies are off the charts from those two features.”

Chris Dwiggins, MUSC Physicians

Identify areas where overspending or overcharging is occurring

Improve downstream automation, all the way through invoice payment

Enable your team to manage by exception

Step 1: Get your vendors on board!

???? Unless you’re buying donuts from Aunt Jo’s bakery, your vendors should be confirming orders electronically (and maybe Aunt Jo can too)

– EDI purchase orders demand an EDI acknowledgement (855)

– Check with your vendors for current capabilities

– As you identify new vendors for upcoming contracts, make sure they’re 855-ready

– If you’re placing orders via email, make sure vendors are sending a confirmation email so you can identify any backorders, price discrepancies, delays

Step 2: Manage confirmations every day! They’re game changers

???? Implement tools that allow you to easily identify and solve discrepancies, including back orders

???? Create policies and procedures for managing confirmations

– Daily review will reduce cost of identifying, fixing discrepancies on the back-end

– Determine who can make the decision needed to manage discrepancies – and accept or deny changes or substitutions, and reject changes if needed

Step 3: Your new mantra is “manage by exception!” Managing confirmations on the front end will streamline everything that follows –

???? Everything that matches can flow right through your system

???? Identify items where discrepancies are flagged

???? Pave the way for downstream automation, especially in Accounts Payable

Step 4: Set up a process to manage phone orders

???? If you have to call orders in – instead of creating an electronic PO – be sure to confirm confirmation number from the vendor

– Have the vendor send an electronic confirmation (EDI or email)

– Save confirmation numbers and documents for audit purposes, documentation, control

– It’s not too late to reconsider and create an electronic purchase order! It’ll save time and provide a better audit trail in the long run

Step 5: Evaluate ongoing vendor performance

???? Start with their capabilities to confirm orders electronically

???? Then track overall statistics

– Percentage of on-time delivery

– Price accuracy

– Back order rates

– Percentage of order fulfillment

Step 6: Then, set up a process to evaluate your performance!

???? Set benchmarks for your current discrepancy rates, overall fill rates, on-time order deliveries

– Track for 3 to 6 months to see if you’re improving

– If you’re fixing inaccurate product and pricing data as it’s identified, your discrepancy rates should be declining

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