How often do you place orders for goods in your business? Chances are, managing those orders is a routine task, but it’s one that can make or break your operations.

A well-managed purchase order ensures accuracy, streamlines operations, builds trust with suppliers and helps your business run like a well-oiled machine.

In this guide, you’ll learn how to create and manage purchase orders effectively, ensuring your business remains efficient and organized. Let’s dive in!

What is purchase order management?

Purchase order management is the process of creating, tracking, and overseeing different purchase order types to ensure accurate procurement, timely delivery, and proper record-keeping.

It helps maintain optimal inventory levels, streamline supplier communication, and support smooth order fulfillment.

Key terms to know

• Procurement: The process of sourcing and acquiring goods required for business operations, often involving supplier selection and negotiation.
• Purchase Order (PO): A formal document sent to a supplier specifying the goods required, quantities, pricing, and delivery terms.

16 steps to create and manage purchase orders

1. Identify the need for goods

Inaccurate demand assessment can lead to costly overordering or stockouts, disrupting operations and customer satisfaction.

That’s why understanding your business needs and planning accordingly is critical to maintaining efficiency and avoiding unnecessary expenses.

💡 Why this is essential: Accurate identification prevents costly mistakes and helps maintain smooth operations.

🛠 How it’s done:

• Assess inventory levels, upcoming sales, or project requirements.
• Use automation tools to analyze demand and set reorder thresholds.

Pro Tip

Fabrikatör’s advanced forecasting tool leverages AI-driven algorithms and growth rates to predict future demand, ensuring purchase orders align with your inventory needs.

By accurately forecasting trends, you can create POs that prevent stockouts and overstocks, adjust orders to match sales cycles, and stay prepared for peak demand during seasonal events or promotions.

2. Select the vendor

Working with unreliable suppliers can result in delays, poor quality, or unexpected costs, creating unnecessary complications in your supply chain.

To avoid this, it’s essential to carefully select vendors who meet your pricing, quality, and delivery expectations to ensure smooth procurement.

👍 Why it matters: Reliable vendors minimize risks and help maintain procurement efficiency.

📋 How to select:

• Compare supplier quotes, lead times, and reliability.
• Evaluate supplier SKUs and product batch sizes to align with your needs.

Pro Tip

To simplify this process, Fabrikatör allows you to create supplier-specific purchase orders quickly and accurately, as you can filter products automatically by the supplier.

Additionally, you can include supplier-specific SKUs to reduce errors, improve communication, and save time when managing inventory and placing orders.

3. Obtain internal approvals

Unauthorized or unapproved purchases can derail budgets and misalign with company policies, causing unnecessary setbacks.

For this reason, securing proper approvals ensures that every procurement decision is deliberate, strategic, and supports business objectives.

✅ Why it’s important: Approvals safeguard your resources and align purchases with business objectives.

📄 How it’s done:

• Submit a purchase requisition (PR) for management or departmental approval.
• Use approval workflows in your procurement system to streamline the process.

4. Create the purchase order (PO)

Poorly prepared POs often lead to miscommunication, delayed shipments, or incorrect orders, impacting your procurement process.

To prevent these issues, a well-structured PO eliminates risks by setting clear expectations and ensuring accuracy.

💡 How to improve? Utilizing software for POs saves time and ensures all critical details are captured.

📄 What to include:

• Product descriptions, quantities, prices, and supplier SKUs.
• Delivery timelines, payment terms, and shipping addresses.

Pro Tip

Fabrikatör allows you to create purchase orders effortlessly, whether from supply planning pages or by selecting specific products for reorder.

It automatically adds supplier information if products are from the same supplier, lets you customize quantities, add notes or references, and save POs as drafts for further review.

5. Send the purchase order to the vendor

Sharing incomplete or unclear POs with suppliers can lead to confusion and errors during fulfillment.

By sending clear and professional POs, you ensure suppliers have everything they need to process your order efficiently.

📌 Why this step is crucial: Clear communication prevents errors and simplifies shipping management.

📧 How to send:

• Send the PO directly via email or supplier portals, or download it for sharing.
• Customize email content to ensure clarity and professionalism.

Pro Tip

Fabrikatör allows you to easily add tracking codes to purchase orders, ensuring accurate shipment monitoring and making it simple to analyze tracking details in reports.

Additionally, the Freight Planner feature lets you select preset freight methods, such as Air, Ocean, Rail, and Road, or add custom options, streamlining logistics and enhancing purchase order management.

6. Vendor fulfills the purchase order

Unmonitored or poorly tracked shipments can result in delays, impacting your operations and customer satisfaction.

That’s why actively tracking orders and maintaining communication with suppliers is crucial to ensuring a seamless fulfillment process.

✅ Why monitoring matters: Active tracking ensures smooth fulfillment and avoids surprises.

📦 What to do during this step:

• Use tools to monitor the status of your order.
• Maintain communication with the vendor to resolve potential issues.

Pro Tip

Fabrikatör simplifies inventory receiving by allowing you to update received quantities directly on the platform and sync them with Shopify in real-time.

You can easily enter accepted and rejected quantities, set defaults for future actions, and track the status of partially or fully received POs, ensuring smooth order fulfillment and accurate inventory management.

7. Receive and inspect goods

Accepting goods without inspection risks introducing damaged or incorrect items into your inventory.

To maintain quality and accuracy, verifying deliveries against your POs is a necessary step.

⚠️ What to do if issues arise: Reject any inventory that doesn’t meet quality or quantity expectations.

🔍 How to inspect:

• Cross-check received items against the PO and packing slip.
• Use tools like barcode scanners to receive inventory efficiently.

Pro Tip

Fabrikatör allows you to reject inventory directly from the Receive Inventory page, ensuring accurate record-keeping without impacting available stock levels or restocking recommendations.

Rejected quantities are included in exported POs and custom reports, providing clear documentation for analysis and maintaining transparency in your inventory management process.

8. Vendor sends the invoice

Invoices that don’t match your POs or delivery records can lead to financial discrepancies or overpayments.

For this reason, verifying invoices is crucial to ensure you’re only paying for what was delivered and agreed upon.

📌 Why this matters: This ensures financial accuracy, prevents overpayments, and maintains trust with your suppliers.

📄 What to verify:

• Ensure the invoice matches the PO and delivery records.
• Check for correct pricing, quantities, and any agreed discounts.

9. Process and pay the invoice

Delaying payments can strain supplier relationships, while rushed payments may result in costly errors.

Therefore, processing payments accurately and on time is essential for maintaining trust and operational consistency.

💰 How to pay:

• Use your preferred payment method (e.g., bank transfer or online payment systems).
• Confirm that all approvals are in place before releasing funds.

📌 Why timely payment matters:

Prompt payment strengthens supplier relationships and avoids potential delays.

10. Utilize purchase order software to automate processes

Manually managing POs is time-consuming and prone to errors, especially for growing businesses.

By automating the process, you can streamline workflows, reduce manual effort, and improve efficiency.

📌 Why it matters: Automation reduces manual effort, eliminates errors, and improves decision-making.

🔧 What automation offers:

• Easy PO creation with customization options.
• Real-time tracking of order status and inventory levels.
• Automatic application of MOQs, batch sizes, and landed costs.

Pro Tip

With automated Fabrikatör’s purchase order feature, POs can be created through Replenish, Plan, or standalone options tailored to your needs.

Orders can be sent directly to suppliers or downloaded, with minimum order quantities, batch sizes, landed costs, and supplier SKUs applied automatically to save time and reduce manual effort.

11. Update purchase order records

Poor record-keeping can create confusion during audits or reporting and hinder decision-making.

That’s why keeping accurate and updated PO records ensures transparency and supports future procurement strategies.

✅ Why it’s important: Accurate records improve accountability and streamline decision-making.

📄 How to update records:

• Record transaction details, including payment and delivery confirmations.
• Store related documents, such as POs and invoices, for easy reference.

12. Analyze purchase data

Ignoring procurement data prevents you from identifying trends or optimizing processes, leading to inefficiencies.

By regularly analyzing data, you can make informed decisions and uncover opportunities for improvement.

📌 Why it’s valuable: Data-driven insights enhance operational efficiency and drive smarter decisions.

📊 How it’s done:

• Evaluate vendor performance, delivery timelines, and order accuracy.
• Use this data to adjust strategies or negotiate better terms with suppliers.

Pro Tip

Fabrikatör provides access to over 100 metrics, enabling you to monitor inventory, sales trends, and supply chain performance in real-time.

This data empowers you to make informed decisions, assess inventory health, and proactively address potential challenges.

13. Manage minimum order quantity (MOQ) warnings

Failing to manage MOQs effectively can result in overstocking or unmet supplier requirements, disrupting your operations.

To optimize your process, handling MOQs correctly ensures efficient ordering and reduces unnecessary costs.

💡 Why it’s important: Proper MOQ management prevents inventory imbalances and saves costs.

🔧 How it’s done:

• Automatically apply MOQs and batch sizes during PO creation.
• Combine orders or products to meet supplier requirements without overstocking.

Pro Tip

Fabrikatör allows you to set Minimum Order Quantities (MOQs) at the Product Group level, ensuring the combined quantity of all variants across options meets bulk ordering requirements efficiently.

For more specific needs, you can set MOQs at the Product Option level, requiring a minimum total for variants within a single option, such as a specific color or style, to streamline inventory management and reduce stockouts.

14. Add landed costs to purchase orders

Overlooking additional costs like shipping or customs can lead to pricing inaccuracies and profit losses.

By including landed costs, you ensure accurate expense tracking and maintain profitability.

📌 Why this matters: Accurate landed costs support better pricing strategies and profit margins.

📋 How it’s done:

• Add freight charges, import fees, and taxes directly to POs.
• Use automation tools to factor these costs into pricing.

Pro Tip

Fabrikatör allows you to easily add landed costs, such as duties, freight, and insurance fees, directly to your purchase orders for more accurate cost tracking.

By incorporating these additional expenses, Fabrikatör calculates the total cost of your purchase order, giving you a clear view of overall expenses and ensuring better pricing and margin management.

15. Evaluate supplier performance

Neglecting to evaluate suppliers can result in recurring issues or missed opportunities to improve your supply chain.

That’s why assessing supplier performance regularly is key to maintaining reliability and quality.

✅ Why this step adds value: Continuous evaluation strengthens partnerships and ensures reliable service.

📊 What to evaluate:

• Delivery accuracy, timeliness, and responsiveness to issues.
• Product quality and overall supplier support.

16. Conduct post-purchase evaluation

Skipping post-purchase evaluations can prevent you from identifying strengths and weaknesses in your procurement process.

To ensure continuous improvement, reviewing the entire cycle strengthens supplier relationships and enhances operational efficiency.

✅ Why this step is essential: Post-evaluation drives continuous improvement and builds more effective supplier relationships.

💡 What to assess:

• Supplier reliability, delivery quality, and adherence to terms.
• Internal workflows and opportunities for process improvement.

How can you be more cost-effective with Fabrikatör’s purchase order features?

Fabrikatör is a powerful inventory management tool for Shopify stores. It effortlessly streamlines purchase order creation and optimizes supply chain management.

Thanks to its smart automation features, you can quickly and seamlessly:

✨ Create purchase orders tailored to your needs via Replenish, Plan, or standalone modes

✨ Track incoming inventory and update Shopify stock levels in real-time to maintain accuracy.

✨ Manage supplier-specific SKUs to avoid errors and ensure seamless communication.

✨ Analyze 100+ metrics for data-driven decision-making, including sales trends and inventory health.

✨ Simplify bulk ordering by setting MOQs at Product Group or Product Option levels.

✨ Add tracking codes and freight methods to POs for efficient shipment management.

✨ Save time with centralized supplier communication and streamlined PO approvals.

✨ Download and share POs in PDF or CSV formats with customizable templates.

✨ Sell out-of-stock products with Fabrikatör’s backorder feature while inventory is in transit, linked to POs to prevent overselling.

✨ Integrate seamlessly with Shopify, QuickBooks, and Klaviyo to streamline workflows and enhance eCommerce operations.

✨ Automate restocking with an AI-powered replenishment feature, analyzing demand patterns to avoid stockouts or overstocking.

✨ Gain actionable insights from Fabrikatör’s dashboard, tracking metrics like Average Order Value, bestsellers, and dead stock.

And so much more.

Ready to see how Fabrikatör can transform your inventory management?

Try Fabrikatör or request a demo today!