# Using Spreadsheets for Purchase Orders Is a Terrible Idea ## Free Supplier Risk Scorecard Download Download our free supplier risk scorecard here! [Download the free tool!](/content/blog/purchasing-software-spreadsheets-for-purchase-orders#/index.html) ## The Problem with Manual Purchase Orders In many startups focused on hardware and [procurement](/content/blog/what-is-procurement/index.html), manual [purchasing](/content/blog/what-is-an-electronic-purchase-order/index.html) processes are common. Businesses often use spreadsheets to create and manage purchase orders, which can lead to mistakes, wasted time, and insufficient data for making smart purchasing decisions. These issues can slow down product development, lower team morale, increase [purchasing costs](/content/blog/purchasing-costs-software/index.html), and hurt profits. ### Why Switch to [Automated Purchase Order](/content/blog/automate-order-approval-process/index.html) Systems? Using spreadsheets for purchase orders is risky. Manual systems are inefficient and prone to errors. In this post, we’ll discuss why businesses should consider an automated system like [ControlHub](/content/industry/lidar/index.html). We'll cover the drawbacks of manual processes and the advantages of going digital, especially how it can reduce purchasing costs. ### Benefits of [Automated Purchase Order Systems](/content/blog/automate-order-approval-process/index.html) Automated systems streamline the purchasing process. They reduce errors and save time by eliminating the need to manually enter data. This efficiency not only speeds up operations but also helps control purchasing costs. We'll explain the key features of [digital purchase orders](/content/blog/what-is-an-electronic-purchase-order/index.html), including how important order numbering is for tracking and organization. ## Why should you stop using spreadsheets for purchase orders? No one argues that spreadsheets are valuable tools. They speed up several manual processes thanks to formulas that quickly calculate large sums and numbers that you can translate into graphs, charts, and diagrams. However, they are very inefficient and can produce errors and a lack of data your company needs to make better purchasing decisions. ### Spreadsheets are outdated. Spreadsheets are leftovers from 20 and 30 years ago, especially now that advanced software tools (like [purchasing](/content/inventory-track-purchasing-software/index.html) software) can do much faster and more accurate work as your purchase order system. ### Spreadsheets are not quick. In terms of inputting data for purchase orders, your teams must still type information in individual cells, even if columns and rows are labeled correctly. They’ll have to make sure the original purchase order template is copied correctly. Then any formulas must be double-checked to see if inputting any data didn’t alter the results. If your [accounts payable](/content/blog/define-accounts-payable/index.html) staff gets an error message, they’ll have to track down what happened (which takes even more time). ### Lack of standardization Yes, you have a purchase order template that everyone starts out with. But that can change quickly. Let’s say your staff starts a [purchase requisition](/content/purchase-requisition-software/index.html) for your company. The template allows for numeric inputs in some columns. But someone must leave a note or asterisk. Where does the note go? Will someone see the note? What if another department fails to see the important note? What happens when a purchase order becomes way too long? Does the staffer add a row or a column to make it bigger? One person on the requisition team may decide to make purchase orders one way, while another chooses to make it a different way because both people have different preferences. Can you see how manual purchase orders can quickly get out of hand? ### Limited access in Excel. If you’re using Microsoft Excel for purchase orders, only one person can access a master spreadsheet at a time. Yes, your staff can make a copy of the original by using the “Save As” feature. But what if the naming convention is off? Where is the spreadsheet saved? How will someone find it later? Which spreadsheet is the original purchase order? What if there are duplicate purchase orders? Does the purchasing department send one or both orders to a supplier? The vendor may not realize that you should have only sent one purchase order and not both. Then, your accounts payable team may get two invoices, pay both of them, and then you have too much inventory on your hands. ### Errors, errors, and more errors. Let’s assume everyone knows your [standard purchase order](/content/purchasing-terms/standard-purchase-orders/index.html) process. They follow it, but errors still happen. Your team receives a request for a [purchase requisition](/content/blog/what-is-purchase-requisition/index.html) from an email. Someone copies and pastes the information into the correct spreadsheet cells. Did they highlight the entire text? Did your staff miss a column or row? How do they double-check for accuracy? ### No centralized document storage. Spreadsheets offer a wealth of data, from who made a purchase requisition request to standardizing templates for your purchase order process. However, spreadsheets lack a centralized storage system of storage. When you send an email with the attached spreadsheet to the person who approves the purchase request, what if that person doesn’t get to it for a week? What happens when that person is out sick or on vacation? ### Where are the analytics? Data is the new gold for businesses, even ones relying heavily on requisitions for goods as raw materials every month. Spreadsheets are great for containing data, but there are limits to their analysis capabilities, particularly if human errors are introduced into the spreadsheets. An [automated purchase order system](/content/blog/automate-order-approval-process/index.html) gives you robust analytics in addition to automation that reduces human errors and speeds up the purchase order process. ### Suppliers are probably already automated. Have you considered that your suppliers are probably already automated? They are expecting purchase orders in an easy-to-read format they can quickly fit into their system. ### Inefficiencies of a Manual Purchase Order System Manually issuing purchase orders offers dual areas of inefficiency: lost time due to manual labor and human error. ### Generate POs quickly and efficiently. Now that we’ve gone over the many dangers of having spreadsheets as purchase orders, let’s go over some standards for automating your purchase order process a little more. ### What is a purchase order? A purchase order is a standardized form that explains to a supplier exactly how many goods your requisition department needs. Digital Purchase Orders have several key elements that a purchasing department needs for proper order tracking: - Name, address, and contact information of the purchaser - Name, address, and contact information of the supplier - PO number - Item descriptions - Item numbers (if available) - Quantities of each item - Prices of each item - Payment terms, like due on delivery or 50/50 payments - Delivery and logistics details - Subtotals, totals, and amount due. One key way to make tracking easier is through the PO number. ### Purchase Order Numbering Every purchase order utilizes a unique PO number that can’t be confused with another as part of the automated purchasing process. It can contain numbers or letters. ### The Old PO Template/Generator A purchase order generator or template represents one upgrade from a spreadsheet. A purchase order system is the best way to go. [ControlHub](/content/site-root.html), an end-to-end purchasing solution that includes purchase order generation and management, has many features that not only make the purchase order generation process super efficient, but the rest of the purchasing process as well. ### Learnings Manual purchasing processes can be labor-intensive and inefficient for procurement-heavy startups, leading to errors, delays, and reduced morale. Using spreadsheets for purchase orders can exacerbate these issues, as they lack the automation and data management capabilities necessary for efficient procurement. This post highlights the inefficiencies of manual purchase order systems and explains why startups should consider an automated purchase order system. By switching to an automated purchase order system, startups can streamline their procurement process, reduce errors, and make data-driven purchasing decisions.