Imagine the chaos when your much-awaited supplier shipment arrives, only for you to discover that the items or quantities are incorrect. What follows is delays in restocking, frustrated customers, and unexpected costs to resolve the issue.
Without a proper purchase order management process, such problems can become common and quickly spiral into inefficient store operations, lost sales, and unhappy customers.
To avoid this, it's important to have a system in place that ensures your purchase orders are accurately tracked and fulfilled, your inventory levels are properly managed, and your supplier communications are smooth and accurate.
In this article, we’ll explore the essentials of Shopify purchase order management, its best practices, and how Prediko can help automate your operations.
But first.
What is a Purchase Order on Shopify?
A Shopify purchase order (PO) is a document used to manage and track purchases from suppliers. It lists the products, prices, and quantities for an order that a store places with a supplier.
It’s essentially a formal request to buy products or services for inventory or raw materials needed for your Shopify store.
Creating purchase orders lets you track details such as incoming inventory counts, inventory costs, payment terms, and estimated times of arrival. You can then set the right customer expectations for item availability and make better decisions about restocking and moving inventory between locations.
Why should you have a proper Shopify purchase order flow?
A well-managed and structured Shopify purchase order (PO) flow is important and can help you in the following ways
1. Simplified procurement process
A proper PO flow simplifies procurement by creating a workflow for ordering from suppliers. Instead of dealing with messy emails, manual spreadsheets, or verbal agreements, you have a clear document outlining your Shopify purchase order.
This minimizes mistakes in quantities and items, captures all necessary details, and speeds up the approval process, making your purchasing more efficient.
2. Quick and easy inventory management
Inventory management can be one of the trickiest parts of running a Shopify store, but a good PO flow makes it easy.
When everything is documented, you can easily track incoming stock accurately and know exactly what’s arriving and when. This helps prevent out-of-stock situations for your customers or overstocking, ensuring your store is always ready to meet customer demands without freezing your cash in excess inventory.
3. Cost control and budgeting
A structured PO process gives you better control over your spending. By tracking all your purchase orders, you can easily monitor your expenses, compare them to your budget, and cut costs on inventory that has less demand.
This way, you can adjust your purchasing habits, negotiate better terms with suppliers, easily track your cash flow, and find cost-effective alternatives.
4. Accurate and clear supplier communications
Supplier relationships can make or break your supply chain. A maintained purchase order workflow lets you communicate every order to your suppliers with complete accuracy.
This means specifying exact quantities, product details, delivery dates, and payment terms, leaving little room for misunderstandings and incorrect deliveries.
5. Real-time inventory visibility
A well-implemented and tech-driven Shopify purchase order process will give you real-time visibility into your inventory. This will let you see what’s on order, what’s been received, what’s still in transit, and when and how much to reorder
For example, if you’re planning a sales promotion, you can quickly check the consolidated view of your purchase orders to see if you’ll have enough stock on hand. This avoids over-promising and under-delivering to customers.
Related Read: Best Shopify Purchase Order Management Apps in 2024
Challenges with Shopify's inbuilt PO flow and process
While Shopify offers basic purchase order (PO) functionality, there are a few reasons why it might not just be enough.
Reason #1: Manual workflows and processing
Shopify's purchase order system relies heavily on manual processes. Every time you need to create or update a PO, you have to enter the information manually. This can be time-consuming and prone to errors.
Besides, this also increases the risk of mistakes—like entering incorrect quantities or selecting the wrong supplier. This can eventually lead to stock issues, delayed orders, and frustrated customers.
Prediko offers a complete overview of POs segmented by fulfillment stages and enables one-click PO generation with automated fields for expected delivery dates, order quantities, and more. This streamlines your entire purchase order process from start to finish.
Obsidian Piercing, an online retailer in body piercing, faced challenges with Shopify’s PO creation process, spending hours juggling Shopify tabs and Google Sheets to calculate accurate order quantities. By the time orders were placed, the data was often outdated.
They began using Prediko which made the process much faster and more reliable, allowing them to place correct orders and focus on more impactful tasks. The flexibility of having all inventory data in one place increased their bestseller revenue by a whopping 200%.
Reason #2: Lack of real-time inventory visibility and forecasting
Shopify’s PO process is more reactive than proactive. This means it doesn’t provide real-time inventory visibility or any forecasting for product demand. You may often find yourself dealing with stock outs or overstock situations rather than preventing them.
In fact, you may not realize that a product is running low until it’s almost sold out. Without real-time visibility and forecasting, you’re left guessing rather than making informed decisions, which ultimately hurts your sales.
Cloudsharks, a slide brand, struggled with accurate forecasting as they could never order the right amount of inventory to keep up with their expected growth. Using Prediko, they could not only factor in current sales volumes but also forecast expected sales over the next 12 months. This perfectly aligned their average order quantity with growth projections.
Reason #3: Absence of raw material management
If your business involves moving products to and from manufacturers and suppliers, Shopify’s PO system falls short in managing raw materials. The platform is primarily designed for finished goods, tracking and ordering raw materials alongside them is a huge challenge.
You’ll find yourself stuck with tedious, manual tracking leading to production delays that can disrupt your entire supply chain. The cost of working increases almost 9 out of 10 times when there is a disruption in the supply chain. Shocker, right?
Reason #4: No analysis of purchasing patterns
Understanding your purchasing patterns is important for adjusting your procurement. Shopify’s inbuilt PO process doesn’t give you a cumulative and detailed analysis of your Shopify purchase orders.
Without a unified view of purchasing history, you miss opportunities to identify trends, negotiate better supplier deals, or adjust your orders. It also means you’re not using data to make smarter, cost-effective decisions.
For example, you might miss out on volume discounts because you’re not consolidating orders.
Kate Hewko, a leading fashion brand, ran into these same problems. They were dealing with resource allocation and purchase order management issues. To fix this, they integrated their Shopify store with Prediko, a solution that addressed the gaps their previous tool couldn't.
Prediko streamlined their procurement processes, simplified the generation of comprehensive purchase orders, and automated product grouping by suppliers translating into 20% reduced stockouts and 40% improved inventory efficiency.
Best practices for Shopify purchase order management
Purchase order management looks different for every business. Using the following best practices and tips, you can create a workflow that feels almost effortless, like it’s running on autopilot.
1. Automate inventory replenishment
Identify the minimum stock levels for each product in your inventory. Determine at what point you need to reorder based on sales and supplier lead times (order to delivery time).
Integrate apps like Prediko or Stocky with your Shopify store. These apps can automate the PO process by generating orders or giving you alerts when your inventory hits the reorder point. This lets you always have enough stock without manual cross-checking. Don’t forget to schedule regular reviews of your reorder points and adjust them as your sales patterns change.
.png)
Prediko’s buying table generates live PO recommendations using your existing data. It offers you daily and weekly inventory reports on SKUs that are at risk or out of stock. Its health scale gives you a quick view of your current inventory. With its 90+ metrics, you can lay out a smarter inventory plan.
2. Use real-time data
Make it a routine to check your Shopify dashboard to stay on top of current inventory levels and quickly react to changes in customer demand. If you see that a product is selling faster than expected, you must place a PO immediately to avoid running out of stock.
Integrate with Shopify tools that let you track which products are selling well and which are underperforming. This data can inform your purchasing decisions, helping you order more of what’s popular and less of what isn’t.
Prediko’s Insights & Analytics feature on your top-performing products, incoming POs, and overstocks. It also shares real-time inventory reports and “Buy now” nudges notifying when it’s time to reorder products, telling you what to buy and in what quantities.
3. Maintain clear communications with suppliers
When creating a PO, include all relevant details—such as product specifications, quantities, delivery dates, and payment terms. If you’re ordering a product in multiple colors or sizes, list each variant clearly to avoid mix-ups.
Choose a consistent channel for communicating with your suppliers, whether it’s email, Slack, or within the Shopify PO system itself. Confirm that your supplier has received the PO and understands all the details.
After placing a PO, track its progress. If there are any delays or misalignments, address them immediately by contacting your supplier. Keep records of all communications with your suppliers. This is important to address any future disputes or issues with the order.
Prediko makes it seamless to communicate with your suppliers through its in-app emails and exports. This way, you can easily share purchase orders and updates while tracking previous communications.
4. Start with demand forecasting
Start by collecting sales data from previous months or years to identify trends. If you notice that a particular product always spikes in sales during the holiday season, you must forecast higher demand during that period.
Utilize Shopify’s built-in reporting features to analyze past sales performance. This data helps you estimate future demand. Take into account sales from all your channels while considering factors like seasonality, promotional periods, or market trends.
Combine historical sales data with current trends to forecast future demand. Apps like Prediko can help you predict how much stock you’ll need and when so that you can create your POs more accurately. It also lets you import your entire sales history from Excel sheets, providing a complete view for more accurate forecasting.
5. Analyze purchase order patterns
Regularly review your Shopify purchase orders to identify patterns. Monitor how each supplier performs regarding delivery times, product quality, and pricing. If a supplier frequently causes delays or issues, consider finding an alternative, ordering with buffer time, or renegotiating terms.
Identify patterns that can help you save money, such as bulk-purchasing discounts or combining orders to reduce shipping costs. If you notice that ordering larger quantities from a supplier results in better terms, adjust your POs to take advantage of this.
6. Automate payment workflows and keep financials updated
Integrate payment automation tools with your Shopify store, such as QuickBooks or Xero. These can automatically generate invoices based on your POs and schedule payments to suppliers. Once a PO is marked as received, the platform can automatically trigger a payment process according to the terms agreed with the supplier, reducing the risk of late payments.
Set up alerts or reminders for any pending or overdue payments. Keep a check on your financials like cash flow, profit margins, and outstanding payments. You may also look for tools that offer financing options for your purchase order repayments so that you can run your store smoothly without tying up too much capital in inventory.
Azio Beauty, a growing skincare brand faced challenges in managing inventory and cash flow due to its pre-order model. By integrating Prediko, they reduced inventory overstocking and ensured key products remained available. Plus, financing inventory through Prediko helped stabilize cash flow, supporting their continued growth.
7. Integrate with an inventory management app
Now, most of these practices can be easily implemented with the help of a comprehensive inventory management tool. Integrate one with your Shopify store and automate tasks like setting reorder points, demand forecasting, and real-time stock tracking.
Using such tools, you can easily sync inventory across multiple sales channels with accuracy. Plus, you get extra reporting features that help you monitor key performance indicators (KPIs), compare your current inventory against historical data, and make more informed inventory decisions.
Related Read: Our Top Shopify Inventory Software Picks for 2024
How does Prediko PO flow work?
Prediko is a complete inventory management platform and its purchase order flow is built on four core features – planning, sourcing raw materials, building a buying table, and PO management system.
Here’s why 100+ Shopify brands trust Prediko with their purchase order flow.
- Create POs with ease: Prediko allows you to generate purchase orders directly from the Buying Table, where you can get real-time PO suggestions based on your inventory needs and past data. This feature eliminates the guesswork from your inventory planning.
- Track POs in real-time: Prediko lets you monitor every purchase order from creation to fulfillment, all within a single, intuitive view. This real-time tracking capability means you are always aware of the order status.
- Seamless supplier communication: You can easily communicate with your suppliers as Prediko allows you to send POs directly via in-app emails or export them to share further. This integrated communication flow ensures that your suppliers receive accurate and timely information.
- Real-time inventory sync: When items are received, Prediko automatically syncs your inventory levels with Shopify in real time. This means you don’t have to manually update stock levels, saving you time and reducing the risk of errors.
Prediko has successfully transformed the inventory workflows of 100s of Shopify brands. Read our success stories to know how the solution has helped users make smarter inventory decisions.
FAQs
1. How do I make a purchase order?
To create a purchase order in Shopify, go to Products > Purchase orders, click Create purchase order, select your supplier and location, add products, and fill in the necessary details. Save it as a draft or mark it as Ordered to update your incoming inventory.
2. How do I import purchase orders into Shopify?
To import purchase orders, use third-party apps available in the Shopify App Store or utilize Shopify's API for custom integrations. Shopify itself does not have a native feature for importing purchase orders.
3. How does Prediko help with purchase order management?
Prediko simplifies purchase order management by allowing you to create POs directly from the Buying Table with real-time suggestions, track them from creation to fulfillment, communicate seamlessly with suppliers via in-app emails, and sync inventory levels with Shopify automatically.
