#16 Discover P.O. (Purchase Order) Automation Metric

Welcome to our series, OMG: One Metric for Growth, where we dive deep into real-life examples of how one metric helped an organization to grow their business. Today's Metric for Growth is:‍

“Discover P.O. (Purchase Order) Automation Metric” 📈

About Sterling Spares, Kolkata!

Sterling Spares is one of the finest automobile component distribution houses catering to all types of customer segment across India and especially, in the Eastern zone. In these 27 years, Sterling Spares has launched numerous brands with a high level of satisfaction amongst all stakeholders.

‍What is the importance of getting PO Automation? 📊

When dealing with 100s or 1000s of SKUs, it becomes important to review both over and under stock in detail. Sometimes, it becomes difficult to avoid over-stock. But it becomes critical to prevent stock out. Missed sales opportunities due to stock out are generally difficult to recover.

How did PO Automation help Sterling Spares prevent stock-outs?

Sterling Spares is dealing into 1000s of SKUs, and in automobile industry they also have to keep spare parts stock for discontinued vehicles. Every week they manually prepare the PO based on following parameters.

1) Past Sales – They exported data from ERP for the past few months sales.  

2) Current Stock – Similarly, they exported the current stock.  

3) Gross Margins – Some products have high margins, as their sales cycle is long and interest on inventory costs is also high.

4) Changing Trends – Based on the market report and past data, they noted the trend.

5) Shortage – Based on the information from vendors and the market, they used to shortlist the shortage items.

6) MOQs – Even after finalizing the PO, one must often fulfil every supplier's minimum order quantity requirement.
The first three factors took a lot of time as they had to compile past sales, current stock, and requirements using complex Excel formulas. The last four factors are more situational in nature.  

Using an automated tool, they were able to automate the first 3 steps which saved them few hours every week. Now the process has reduced the chances of error.

What were the 4 significant benefits for Sterling Spares?  

In today's fast-paced business environment, managing and maintaining the right inventory level can be one of the competitive edges.  

1. Prevention of Out-of-Stock Situation - Proactive steps help to take preventive measures, and sales loss due to stock out can be avoided.

2. Data-Driven Decisions - Automated systems provide valuable insights, enabling more informed decision-making regarding inventory management and procurement.

3. Improved Relationship with all stakeholders - Consistent and timely purchases can help strengthen relationships with vendors and customers.

4. Efficiency - Automation reduces the manual effort involved in monitoring stock levels and generating purchase orders, freeing up valuable time for your team to focus on other critical tasks.

Automating PO generation is a game-changer for businesses looking to maintain optimal inventory levels and prevent sales loss due to stock-outs. By leveraging technology, you can ensure your inventory is always aligned with customer demand, leading to increased efficiency, improved relationships, and, ultimately, higher sales.

Whenever You are Ready! 🔑  

Your metrics don't just reflect the past; they lead the future.

At Magenta, we specialize in turning these metrics into actionable steps.

Our Business Intelligence software seamlessly integrates with ERPs like Tally, Busy, Align Books, SAP etc and can assist you P.O. Generation in a click. If you haven't already signed up for Magenta Insights, now is the time!