What is a PO (Purchase Order) System?

Definition: A purchase order (PO) system is an automated way to create bulk purchase agreements between your online store and manufacturers, distributors, or suppliers. The system simplifies how you order stock for your store, giving you simple templated options for creating a purchase order to send to your supplier. All you need to do is fill in the item, quantity, and price information and the system sends the PO over.

Do online stores need PO systems?

That depends on your business model. If you’re the manufacturer (e.g. creating art, handmade jewelry, or custom clothing), you won’t need a PO system. But if you rely on a supplier or multiple suppliers for your inventory, a PO system can be a huge time-saver and a signal to your suppliers that you’re running a professional, efficient shop.

A PO system makes tracking your order fulfillment tracking simple on the backend. You’ll have a record of your POs plugged into your ecommerce system. Integrating your PO system directly with your inventory tracking system has big advantages, ensuring everything flows seamlessly end to end through your software from supplier to customer fulfillment. This eliminates duplicate work and protects against mistakes made through manual entry.

Why can’t you just create POs manually?

Good news: you can! You’ll just need to find a template online and customize it so that it works for your products. When orders are filled, you’ll need to manually track them, either through a spreadsheet or by hand. (Of course, you probably won’t want to be manually filing important documents like POs.)

As mentioned in the above section, the more work you input manually, the higher the chance of making mistakes. You’ll also be saving yourself a lot of time in the long run if you automate the process. And a PO system is especially crucial if you’re working with multiple suppliers. In that case, keeping track of everything can get tricky.

How do you start your first purchase order?

If your ecommerce platform comes with a PO system, it should be relatively plug-and-play. All you’ll need to do is fill in the blanks. There are also third-party PO systems you can buy that play well with online store software if you don’t have one available natively.

To get started creating a purchase order, make sure you’ve ironed out the explicit details of the agreement — the supplier, the size of the order, the price you want to pay, and any other specifics about the products or the relationship you want to include. Because a PO is as good as a contract, make sure every detail is captured so you can ensure smooth transactions with your business partner.

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