I’ve been in purchasing since 1997. Back then, email (anyone remember Lotus Notes?) was still relatively new, and there certainly wasn’t much talk of “vendor portals.” When we purchased materials, our communication method was the trusty fax machine. We would plan, enter purchase orders in our ERP system (I was using SAP at the time) and physically print out the POs. Then, we would walk over to the fax machine and send them to our vendors. I think we even used cover sheets that had our company letterhead on them. Pretty fancy. Everyone had fax machines; we felt so “techie”! The faxes would go out into the ether and then what happened after that was not always a standard practice.
We Had A [flawed] Process
I’ve worked in the manufacturing industry and bought mostly from contract manufacturers and distributors with lead times anywhere between a few days and a few months, but mostly around four weeks. After faxing the purchase orders to the vendors, my job was done, another great day’s work for Chris – let’s go to happy hour!
Time would pass, and ideally, the vendor would ship in the material to arrive on the date I wanted, receiving would accept the inventory, the vendor would invoice us, we would pay the vendor, use the inventory, and finally get a message to buy the inventory again — a beautiful cycle of purchasing and economic prosperity for all.
Ulcer-Inducing Discoveries
There are exceptions to this perfect plan, however. Every couple of months I would get a call from the warehouse or a production planner asking when my past due PO was actually coming in. This part was always a little embarrassing as it may have indicated I wasn’t paying attention to my vendors…which…in my early days…I wasn’t.
I would think, “No problem, I’ll just look that up in the good ol’ ERP system, give the vendor a call and find out what’s going on, I’m sure it’s on its way.” Sure enough, I would look it up in the ERP, note that I placed the order five weeks earlier and it is one week late. The vendor is going to hear about this!
Next step, I would get on the phone (we used those instead of email, but that’s another subject for another day), call the vendor and ask about the whereabouts of PO 12345. The vendor then says one of the most frightening things a buyer can hear, “We never got your PO.” Invariably, I’d cast blame on the stupid fax machine.
This all could have been avoided, and where the magic of the PO Confirmation process comes in. It sounds so simple, almost unnecessary, but doing it virtually guarantees you’ve removed the “we didn’t get your order” variable.
Historically, when you printed POs, and if you were doing confirmations, you probably had a slot or a folder on your desk where you kept the unconfirmed POs and you would check them every once in a while to see if something wasn’t confirmed. This process is fraught with complexity and inefficiency (read: I never found a good enough, simple enough way to do this using paper).
Enter the Magic of a 21st Century PO Confirmation System
In today’s digital age, leave paper out of this. Every ERP system that has POs likely has a place in the PO header where you can confirm the vendor has received the order. Whether or not the items, quantities, prices and delivery dates are correct is an added bonus, but not necessary right now to get 100% correct. You simply want to make sure they got it. Over the years, I’ve established processes as simple as putting a “C” for “Complete” in the field. For more sophisticated tracking capabilities, I’ve entered the vendor’s order number in the field.
Monitor. Report. Follow Up. Repeat.
So how do we monitor this from a buyer or a manager perspective? The answer is, both parties should be watching this. You create a simple report that looks for any PO placed more than five days ago (or pick a timeframe that works for your business) that does not have a “C” or your unique designation in that header field you found.
Run this report daily.
Every morning.
Clean those up!
Email the vendor, call the vendor, do what you need to do to avoid that dreaded call from distribution or the warehouse that your PO isn’t here because the vendor never got your order. It is your responsibility to ensure that your company has the materials they need when they need them.
Confirm, Confirm, Confirm.
This standard procedure is so simple, and since implementing it decades ago, I have not run into a situation where a PO went past due because the vendor didn’t have the order. Of course the tactical process has evolved with technological advancements, but the foundation remains the same. Happy confirming, everyone!