The Problem: Purchase Orders Stuck in Inboxes
In many companies, purchase orders (POs) are approved via email chains. A manager might be on vacation, or an email gets buried. This delays procurement, causing production to wait for materials. The lack of visibility also means no one knows which POs are pending, leading to duplicate orders or missed discounts.
Real Case: The $10,000 Late Payment Penalty
A food packaging company had a policy that POs over $5,000 needed a director’s approval. The procurement team emailed POs to the director, who was often in meetings. One time, a PO for a critical ingredient sat unread for 3 days. The supplier couldn’t deliver on time, and the company had to air-freight a smaller quantity at triple the cost, plus pay a penalty for late payment.
How ERP Streamlined Approvals
The ERP’s workflow module was configured to route POs automatically based on amount and department. For POs under $5,000, the system auto-approved. For larger amounts, the ERP sent a notification to the director’s mobile app. If no action was taken in 4 hours, the system escalated to the VP. The director could approve with one tap, and the PO was sent to the supplier instantly via the ERP’s integrated email.
The Result: Approval Time Reduced from 2 Days to 2 Hours
- Average PO approval time dropped from 48 hours to 2 hours, improving procurement speed.
- Late payment penalties eliminated because POs were processed on time.
- Procurement team saved 10 hours per week previously spent chasing approvals.