3 Ways to Use Purchase Orders to Get Your Business Through Supply Chain Disruption

Managing inventory well is one of the most important ways to ensure the success of your business. With supply chain disruptions happening across every industry due to the pandemic, effective inventory management is more important than ever. Purchase orders are among the most powerful tools for mastering inventory management, tracking inventory, and maintaining strong retailer-vendor relationships.

A purchase order is a legally binding document that outlines all of the details for the purchase of a large number of goods from a vendor. It includes which items the purchaser needs, how many, the cost per unit, shipping fees, and the delivery time frame and terms. Purchase orders benefit and protect all parties involved in a transaction.

Purchase orders are the foundation of solid retailer-vendor relationships because they provide detailed, clear documentation of transactions. For you as a buyer, they guarantee the agreed-upon price and delivery terms and allow your company to make workflow decisions based on what product you expect and when. For vendors, they guarantee the purchaser’s agreement to pay so they’re not assuming huge financial risk.

The supply chain disruptions of the past few years have highlighted just how important purchase orders are in inventory management for retailers. Even with supply chain delays, having a purchase order in place allows you to track inventory for items that are currently in stock and those that are yet to arrive.

Here are three ways you can strategically use purchase orders to weather supply chain disruptions and improve your company’s inventory management:

1. Market your current inventory.

Your fulfilled purchase orders serve as a detailed record of your current inventory. Use that record to identify what you currently have in stock and reallocate your budget for new inventory to market those items. This will help lessen the impact of delivery delays. Try to move what you currently have while you wait for more supply.

2. Communicate openly.

One of the benefits of purchase orders is that they provide clear documentation of what you’re expecting and when. Use purchase order information as a guide to communicate frequently and openly with your vendors about production and shipping status.

Communicate with your customers about supply chain disruptions, direct them to other products you currently have in stock that might fit their needs, or tell them you’ll follow up with them as soon as your inventory arrives. Open communication goes a long way in maintaining good retailer-vendor relationships.

3. Create a well-informed plan.

Purchase orders are the No. 1 tool for tracking inventory, and inventory tracking is essential to proper preparation. Review both open and closed purchase orders to see what you have in stock, what you’re waiting on, and what you anticipate you’ll receive based on the trends of your past orders. You can use this information to project your sales and where you have opportunities to pivot as needed.

Being strategic with purchase orders is the best way to get your business through the uncertainty of supply chain disruptions. Your company can use purchase orders for inventory management to market what you currently have in stock, communicate with your vendors and customers, and plan more accurately so you can successfully ride out disruptions now and in the future.

Burak Ciflikli is the COO of Jotform, a popular online form builder that’s on a mission to make organizations more productive and people’s lives easier.