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The challenge with processing unstructured order confirmations
The challenge with processing unstructured order confirmations is nothing new. Every day, purchasing departments are met with a flood of these documents and tasked with the manual process of entering this important but often unstructured information into their purchasing system. To make matters worse, the COVID-19 pandemic has worsened the global shipping crisis and caused global delays to orders.
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In procurement, the pressure caused by this supply chain disruption has manifested itself through a backlog of order confirmations that need to be processed. Procurement managers are reporting a dramatic increase in purchase order confirmations as the ongoing disruption is forcing suppliers to provide multiple order confirmations for each purchase order. Not only are the volume of order confirmations increasing, but also the number of discrepancies and variances that require action. The need for business leaders to future-proof their processes against disruption in an uncertain and interconnected world comes into focus. Purchasing needs to implement intelligent solutions enabling automated processing of order confirmations to mitigate risk, handle discrepancies and improve supplier relations.
Purchase order, purchase order confirmation and invoice – what is the difference?
Purchase orders, purchase order confirmations and invoices are central documents in procurement which need to be processed on a daily basis. They serve different functions and play an integral role in the B2B communication as they provide better visibility into the purchasing processes, include basic order details and provide a legal basis.
The difference between structured and unstructured documents
Documents like purchase orders and invoices are classified as semi-structured or structured documents. While there are several styles of invoices, for the most part they all contain the same information such as company name, address and phone number, invoice number, due dates, line items, total amount due etc. Moreover, information is assigned to certain columns and positions in a clearly structured way. That is why OCR software is often used to digitally capture the information on invoices. The same holds true for purchase orders. These documents specify the quantity, quality, unit and total price of goods or services that suppliers must provide. They also state the general terms and conditions such as delivery terms, price, payment terms, payment means etc. Because of the structured nature of invoices and purchase orders, these documents are relatively straightforward and easy to process – either manually or automatically. Purchase order confirmations, on the other hand, are unstructured documents. What kind of information and how it is confirmed mainly depends on the supplier creating and sending the document.
The challenge with processing unstructured order confirmations
For purchasing, checking, comparing and processing incoming purchase order confirmations has always meant laborious and error-prone manual work. The greatest challenge with order confirmations certainly lies in its unstructured nature. In contrast to invoices and purchase orders, for example, purchase order confirmations are unstructured documents. Unstructured means that the supplier confirms specific components as they see fit. Therefore, it often happens that order confirmations from different suppliers have a different structure. For instance, this can apply to the delivery date. On order confirmations, there can be a desired delivery date and an actual delivery date. The information is considered structured if data is contained neatly within its designated column. However, information often bleeds into the column next to it. The challenge here is to find out which information is the desired delivery date and which is the actual delivery date. This lack of structure increases the manual workload for procurement teams significantly. Therefore, digital automation solutions which are capable of processing this kind of unstructured data reliably and quickly come more and more into focus.
The challenge with too many order confirmations
Recent events have made comparing and processing all incoming order confirmations a near on impossible task for many procurement teams. Due to unforeseen changes and supply bottlenecks, many suppliers are forced to generate and send a new purchase order confirmation to the buyer whenever a detail of the order changes. Consequently, the buyer receives up to ten order confirmations for one purchase order which he or she must check each time. Thus, the non-transparent and unstable supply chain directly affects operational procurement. COVID-19 has revealed and intensified the fragility of complex global supply chains with existing or impending supply bottlenecks drastically increasing the volume and inconsistency of purchase order confirmations which need to be processed.
The benefits of automating unstructured order confirmations
Given the increase in documents and evidence that uncertainty is here to stay, procurement urgently needs to automate the processing of purchase order confirmations with intelligent digital solutions which reliably process unstructured documents. Buyers can benefit immensely from automated processes and workflows which relieve them of time consuming, error prone and mentally draining tasks. Moreover, automated order confirmations make purchasing more efficient by increasing productivity, reducing errors and freeing up more time for value-adding activities. Buyers do not need to input data manually and repeatedly anymore. Automated order confirmations facilitate better production planning thanks to smart platform solutions that can identify delivery volume discrepancies and potential delays right away and source other suppliers or adjust the planning as needed. This foresight enhances compliance and quality and allows for flexible risk management. On top of that, automated processes provide transparency of the supply chain and help spot discrepancies faster. Buyers are in control of the processes at all times and can react to unforeseen and spontaneous changes. Thus, smart automation solutions optimise and future-proof purchasing processes for present and future challenges.
Pfleiderer Case Study
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