How PO Acknowledgements May Be the Hidden Metric Ruining Your Supply Chain

Pretty much the whole world, which for decades was in blissful ignorance of the term, is now at least somewhat familiar with the concept of “supply chain”. It’s too bad they learned about it from our current news cycle, which is full of horror stories that show how really bad things can get when supply chain management goes wrong.

At least some of the current pain could have been avoided with good overall supply chain management practices. Those start with robust buyer and supplier purchase order (PO) lifecycle management–and one of the most important capabilities in all that is PO acknowledgement. It’s sort of the glue that holds the whole thing together, and the starting point of the supply chain.

PO acknowledgement is pretty straightforward. It means that whatever you communicate via the PO to your supplier is seen by the supplier, accepted and agreed to, and all that is acknowledged back to you, documented, and confirmed in your ERP. The loop is closed, and both you and your supplier are on the same page about every detail on the PO.

Good PO lifecycle management goes from the creation of the PO, once you’ve selected the supplier you’re going to use, right through to the receipt of the ordered items. There are a great many steps along the way and quite a bit of work involved, and things can go wrong at any point. Your NetSuite ERP provides some excellent tools to help keep all those things on track.

But it doesn’t have a closed-loop PO acknowledgement feature with suppliers. Because acknowledgements are so important to ensuring the PO lifecycle runs smoothly and that your supply chain is not at risk, that’s a big miss–one that SourceDay can help fix. Our PO Collaboration tools add that important capability, allowing you to get the most out of your NetSuite investment and ensure every PO line is confirmed every time.

Think about all the different elements of a typical PO. There’s each line item’s specific description, its price per unit, the total number of units ordered and the total price, and the agreed-upon delivery and/or ship date. If your supplier doesn’t explicitly acknowledge every single element of every single line item, how can you know that you’re going to receive exactly what you need, in the quantities that you need, on your required timeline and at the price you expect?

Yet many businesses don’t have a closed-loop acknowledgement capability. They don’t track the rate at which their POs get acknowledged by their suppliers or in what time they receive a confirmation. That means they’re just assuming all those things will go right, for every line item of every purchase order. And sometimes they are right about that–until they’re not. That’s when the pain begins.

Without timely PO acknowledgement, the entire supply chain is at risk. Whether you’re expecting parts you’ll use to assemble a final product or having your supplier ship finished goods straight to your customers, you’re assuming all the risk of things not being delivered right or on-time.

That’s where SourceDay can help. Our PO Collaboration solution includes closed-loop acknowledgement of POs, so that you know when your supplier has committed to exactly what you ordered and this information is then confirmed in NetSuite. In addition, we help you track other key metrics about your suppliers, including acknowledgement rate, responsiveness, and on-time delivery rate. All those metrics are readily visible on a central dashboard where you can see how well all your suppliers are doing at these critical tasks, in real time and in one place.

There’s another critical element of acknowledgement that can cause enormous problems like what we’re seeing on the nightly news. Research shows that 52% of POs change. And in fact, it’s poor change order management that’s one of the biggest sources of delivery problems. Even with NetSuite in place, change orders require a ton of manual work, including phone calls from your team to your suppliers’ teams and back, the dreaded paper copies of POs with notes scribbled in the margins, or sticky notes all over desks and computer monitors as your team tries desperately to keep up with all the changes. Then there’s the data entry part of trying to find time to accurately get all of the PO changes back into NetSuite so planning, scheduling, and finance can trust the PO data they are using to make critical business decisions. 

SourceDay’s automated PO Collaboration enables complete visibility of all aspects of your POs, including change orders. It allows you to bring the power of NetSuite to your suppliers as well, so that you have mutual visibility into change requests and acknowledgements, along with all the aspect of the original PO. It does away with all that manual work, all those phone calls, and all that paper.

You need the right tools in place to avoid the problems caused by poor PO management. Critical to those efforts are reliable supplier metrics and automated PO processes. SourceDay’s Supplier Scorecard and PO Collaboration solution will fix those problems. And perhaps most important of all to their success is our PO Acknowledgement capability which is believed to be one of the most important steps of the entire supply chain.

Don’t let the lack of proper PO acknowledgements from your suppliers ruin your supply chain. Make the headlines in a good way–not in the way so many companies are now hitting the news.

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