In our Modernize Your Operations Blog, we explored the benefits of modernizing with Microsoft Dynamics 365 Business Central. One of the core themes of that post was communications breakdowns and unifying data.
But what does this even mean in practice?
Enter today’s topic and uncover why the Microsoft Dynamics Purchase Order System in Dynamics 365 Business Central is a standout choice, even for accounting!
When it comes to selling products, effective inventory planning and purchase order management is a critical process.
Enter the purchase order (PO)– the unsung hero of procurement.
Here’s Why Purchase Orders are Crucial for Your Business and the Hero of our Story:
- Clarity and Accountability: Purchase orders formalize agreements between buyers and sellers, detailing items, quantities, prices, delivery dates, and terms. This structure helps mitigate disputes and ensure smooth transactions.
- Budget Control: As your business grows, POs help track and manage orders, reducing the risk of errors and keeping spending within budget.
- Legal Protection: Acting as a binding contract, a PO outlines payment terms and safeguards both parties against potential disputes.
How Business Central Enhances Your Purchase Order Process
NO FALLING ASLEEP!
Now that I’ve laid the groundwork, let’s pivot to how companies can leverage Dynamics 365 Business Central to enhance your purchase order process.
Vendor Management:
- Align your products to vendor offerings for easier communication
- Set specific terms and price lists by vendor
- Maintain unit of measure schedules for accurate receiving and bulk pricing
Compliance and Tracking:
Use features like serial number tracking, warranty management, and lot-for-lot accounting to keep a tight grip on inventory and compliance, particularly for consumables with expiration dates.
Streamlined Approvals:
For companies requiring management oversight, Business Central offers preconfigured approval workflows and customizable options in Power Automate for complex scenarios.
Efficient Inventory Control
While the primary function of a purchase order is to facilitate purchasing, its real hero function lies in receiving!
Whether you are a one-person shop or an enterprise company using third-party logistics (3PL), when you receive, and the quantity you receive, matters.
Often POs receive split shipments from different delivery carriers. Your POs help track this and help keep your vendors honest if they send you a bill for 100% of your order when you have not received it.
Pro tip: If discrepancies arise, ask your vendor for a prepayment discount!
Hellooooooo margin!
Financial Insights
With the tracking of inventory shipments, your finance department can match vendor invoices to purchase orders and the submitted price on the purchase order.
Fancy accountants call this a three-way match: Inventory receiver, purchase order, and vendor invoice (bill, voucher, purchase invoice).
Business owners call this accountability!
This information produces valuable metrics such as buying cost and frequency of purchases. Tracking these metrics can reveal opportunities for negotiating better terms with vendors, such as volume discounts when purchasing in larger quantities.
Hiya again, margin…missed ya!
How Dynamics 365 Business Central Streamlines Drop Shipping
For businesses that drop ship, fulfilling orders without holding inventory means purchasing products from third parties—usually wholesalers or manufacturers—and shipping them directly to customers.
While this reduces inventory costs and expands product offerings, it also adds complexity to managing POs and inventory tracking.
Dynamics 365 Business Central offers comprehensive tools to streamline the dropshipping process, boosting efficiency and accuracy:
- Purchase Order Automation: Automatically generate POs based on customer sales orders, reducing manual data entry and errors.
- Real-Time Inventory Visibility: Gain real-time visibility into vendor stock levels and lead times, aiding informed purchasing decisions.
- Integrated Vendor Management: Manage vendor details, such as contact information, pricing, and delivery performance, ensuring up-to-date information when creating purchase orders.
- Three-Way Matching: Ensure you only pay for items that were ordered and received, reducing discrepancies and improving financial accuracy.
- Tracking and Reporting: Monitor the status of purchase orders, vendor performance, and overall drop shipping efficiency.
- Workflow Automation: Streamline approval processes for purchase orders, ensuring prompt review and approval.
By leveraging the robust capabilities of the Microsoft Dynamics Purchase Order System in Dynamics 365 Business Central, businesses can efficiently and accurately streamline processes, manage vendor relationships, and enhance financial oversight.
And these are just a few of the benefits.
Ready to elevate your procurement game? Embrace the power of Business Central and watch your operations thrive!
Do you feel like you are struggling with inventory management?
Whether you are a one-person shop or juggling multiple warehouses, we’re here to help.
UGM solves problems with clarity, simplicity & honesty.
A proud Microsoft Partner since 2003, we can help you determine the best solutions for your organization’s unique needs.
While we lead with accounting solutions such as Business Central, our off-the-shelf solutions can be configured with custom front ends for a customized, personalized, user-friendly interface with unique reporting options.
Contact UGM to discuss your challenges and explore how we can support your success!
