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Dental Procurement 101: The Big Payoffs of Purchase Orders

July 19, 2021

At Method, we uncomplicate the complicated.

Although entering purchase orders for everything you purchase may seem daunting and time-consuming, at Method we’ve put in the work, so you don’t have to. Using Methods cloud-based software, you can create a full PO with all relevant information within just a few minutes.

Of course, you can always purchase supplies without one. The availability of today’s online shopping portals makes it all too easy. After all, why wouldn’t suppliers make it easy for you to buy what you need at the price they want you to pay? Vendors know a friction-free ordering process that bypasses the negotiation process makes for higher selling prices.

But purchase orders are the nexus of procurement with good reason, and you shouldn’t be buying without one.

The Payoff of POsDentist creating purchase order

In our personal lives, we buy cars, houses, and groceries all without using a PO. At the office, we log on and quickly find the things we need, process an order, and poof, it arrives at our door, all without a PO. So why bother?

When your household income is suddenly tightened, and you’re looking to pinch your pennies, gathering the necessary information on where your dollars are being spent can be difficult. How much you’re spending on what, what changes will have impactful results, what you should expect to outlay in a month, and where you should shop are all decisions that are better informed with accurate, reliable data. And yet, that’s just the tip of the iceberg.

What if you could quickly and easily see how much that change to the non-dairy milk costs your family? What if you could price shop all of the grocery items you need to purchase with every retailer who has it available at the click of a button? What if you could call the shots, confirm the price, the delivery date, and details on what you require from the retailer, in a legally binding document they must uphold?

Now shift the same principles to business to business (B2B) purchasing transactions that entail even more challenges due to the level of detail and complications of requirements, making them highly susceptible to invoice disputes. Payment terms, pricing discrepancies, and adherence to regulatory requirements are just some of the reasons covering yourself in the procurement of goods with a legally binding document simply makes for good business sense.

Legal Protection and Communication of Order Details

Protect your business and simplify the workflow.

A purchase order is a legally binding document that communicates and aligns all parties on order details such as:

  • Name and Address of The Buyer
  • Name and Address of the Supplier
  • Delivery and Billing Address of the Buyer
  • Purchase Order Number
  • Preferred shipping method
  • PO Issued On Date
  • Item Details (SKU number, quantity, price)
  • Terms and Conditions
  • Additional Instructions

Improved Budgetary Cost Control

Stay in control.

Controlling purchases through the issuing of POs allows improved visibility on expenditures and the monitoring of spend vs. budget and enables improved cost control.

The 4 Way Match Process Explained

Pay what you should for what you received.

As we explained in The Big Small Costs of Poor Procurement, issuing a PO is the first step in the three-way match process. POs hold suppliers accountable to deliver what you ordered when you want it, at the price you expect to pay—thereby preventing suppliers from increasing costs without notice or justification (aka price creep).

1.) Order Tracking

Track down that order, fast.

The next step of the three-way match process, receipt of goods, allows you to track orders, know the date and quantity delivered, and avoid duplication of orders. And most importantly, know when you’re missing a delivery, allowing you to be proactive and mitigate the risks of a shortage.

2.) Monitor Vendor Performance

In order to improve, you must first measure.

Purchase orders are also vital to assessing vendor performance, affording you a high-level view of price, delivery, and service performance.

3.) Yield Your Purchasing Power

Leverage your volume to lower your costs.

Whether you purchase a significant amount of supplies over a year or buy a large amount of one specific item, knowing how much you spend on what affords you the leverage to use your purchasing power to negotiate better prices. And it’s ok if your employees aren’t master negotiators, setting up the right competitive environment yields the best results with minimal effort.

4.) Spend Reports for Informed Procurement Decisions

Informed, strategic decision making.

Spend reports inform strategic, insightful purchasing decisions and actions. And can help you better plan for your future. Whether setting up a Kanban system or Reorder Points (ROP), having historical insights into your purchases by product, by month, or any given period gives you the information you need to fine-tune your inventory and purchasing strategies and practices. Buying just the right amount ensures you have what you need while avoiding tying up cash flow unnecessarily.

Simply put, in the world of procurement, issuing POs is standard practice, and it makes for a good look, signaling to suppliers that you’ve got your stuff together, and that they should too. It sets the precedent that any price increases need to be advised of and explained. Where and how you spend your hard-earned revenue is a big deal. Issuing purchase orders is the first critical step to treating it like one.

Let Method Help

At Method, we simplify your procurement processes for you with our cutting edge software. You can manage your inventory, create purchase orders, and more all in one system. Schedule a Demo to see it in action today or Contact Us with any questions you have!