The InstaSupply Purchase Order

At InstaSupply we believe that the business ordering process between customers and suppliers is broken.

The Antiquated Process

When shopping as consumers, we usually place orders through a combination of action and conversation. Taking a number of products to the check-out shows our desire to buy them. Ordering food at a restaurant, or calling up your local take away on a Friday is a spoken purchase order. Putting petrol in your car at a service station, before paying, is an order. The seller usually demands payment straight away and gives the buyer a receipt for that payment.

In business, the ordering process is more complex. We have a series of agreements that generate documents as a record of those agreements. The process can involve a number of steps:

  1. Buyer submits a request for quote (RFQ), searching for vendors of the required products.
  2. Supplier creates a quote or bid for the products in the RFQ and submits to the customer.
  3. Buyer submits a Purchase Order as per supplier quote, and states the final amount they intend to pay.
  4. Supplier agrees to Purchase Order and creates an internal Sales Order to track it.
  5. Supplier sends invoice to customer that matches the items and value of the Purchase Order.
  6. Customer may request a credit note if some items are not delivered.
  7. Supplier issues credit note for the missing items from the Purchase Order.

In total there are potentially six documents as a result of this process:

  • RFQ
  • Supplier Quote
  • Purchase Order
  • Sales Order
  • Invoice
  • Credit Note

Generating, managing, and storing these documents is costing businesses both time and money. This is the fundamental reason we at InstaSupply think this process is broken.

Modernising the Process

In the current process, each document either records a side of the negotiation needed to reach agreement, or provides proof for accounts payable or accounts receivable. It is the first of those cases that InstaSupply are currently focused on simplifying. With InstaSupply technology, we know we can reduce the required documents to the following:

  • Purchase Order
  • Invoice
  • Credit Note

Most modern technology-backed purchasing systems are designed around managing and storing the documents in the ordering process. They allow customers to generate those documents and ingest related documents from suppliers at each stage of the conversation. Each negotiation must be backed by a document that proposes change to those that came before. This results in an abundance of paper even when everything is right first time, and an even more excessive paper trail if changes need to be tracked. It is the information on the documents that is most important, but each change of information results in a new document because change to a single document would be impossible to track.

The InstaSupply Purchase Order

The above process is also what InstaSupply are supporting right now, albeit with a focus on discovery and learning. However, we are going one step further and removing the requirement for so many documents; streamlining the way information is passed from customer to supplier and back again; and containing it on a single adaptable cloud-hosted purchase order document.

We also believe we can minimise the overheads required to create these documents by transferring or “flipping” the data from the purchase order to any required invoices or credit notes involved in the full order.

Right now, we’re extending our purchase order so it can adapt with each interaction. Using the cloud, we’re able to provide both the customer and the supplier with access to the same document, and propose changes until they both reach agreement. We are also able to provide an interface that allows customer and supplier to communicate regarding the purchase order, and have those communications logged as a conversation on the purchase order document itself. What’s more, we are aiming to have both customers or suppliers able to create purchase orders from scratch in order to allow suppliers to generate purchase orders as quotes.

In summary, this means that the InstaSupply Purchase Order can replace the RFQ, the supplier quote, the customer purchase order, and the supplier sales order just through allowing the customer and the supplier to communicate and negotiate changes on a single page until both parties accept. This also means we can minimise the effort needed by the supplier to issue an invoice, by allowing them to create a packing slip, an invoice, or even a credit note in our system, because we convert the agreed data in the purchase order to each of those documents. In turn, those documents are automatically associated with the right PO and no longer need to be ingested into InstaSupply because they already exists there.

We have a long road ahead to achieve this, but over the next few weeks you will notice a bunch of changes that move us closer to this goal. As always, we’ll be working with both customers and suppliers to make sure we meet their requirements and still provide all the data they need to get the job done.

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