Maximizing efficiency through PO optimization

Featuring Josh Bartel and Drew Roth

Guest-at-a-glance

Josh Bartel

CEO

Hydrian Inventory Optimization

Josh graduated from Stanford and previously co-founded Sanitopia.

Drew Roth

Director of Product Engineering

Hydrian Inventory Optimization

Experienced software engineer focused on inventory optimization.

Episode summary

In this episode, Josh Bartel and Drew Roth discuss PO (Purchase Order) optimization, a crucial component of inventory optimization services. They explain how PO optimization focuses on improving the “how” of placing purchase orders, aiming to minimize inventory while maintaining high customer service levels and reducing labor costs.

Josh and Drew highlight common issues in traditional PO processes, such as long closure times and multiple receipts per order. They introduce key principles of PO optimization, including building orders unique to each fulfillment facility and matching quantities to vendor stock levels. The duo emphasizes the benefits of this approach, including reduced lead times, fewer errors, and labor savings through improved unit of measure rounding.

The conversation also covers the advantages for suppliers, the data requirements for implementing PO optimization, and the significant improvements seen in clients’ operations. Josh and Drew share examples of how this process can lead to more efficient truck loading and drastically increase the percentage of order value arriving in the first receipt. They conclude by noting that PO optimization is part of Hydrian’s broader service offering, aimed at enhancing coordination between clients and their vendors.

Key insights

Understanding PO Optimization

Understanding PO optimization means making sure we use less inventory and spend less on labor while still making customers happy. It’s all about getting better at how we order things from our suppliers.

Factors in Purchase Order Creation

Factors influencing PO creation include tailoring each order to suit specific ordering and fulfilling facility lanes. By customizing POs in this manner, companies can optimize logistics, minimize errors, and ensure smoother operations throughout the supply chain. Additionally, verifying that ordered quantities align with vendor stock levels is crucial to prevent fulfillment complications, such as backorders or delays. 

Vendor Benefits and Collaboration

Optimized PO has advantages for both clients and suppliers. By enhancing the efficiency of order fulfillment, vendors may experience significant cost savings and operational streamlining. Importantly, these benefits can be achieved without disruption to existing workflows, fostering a positive collaborative environment between parties. Overall, optimizing purchase orders fosters mutual gains and strengthens relationships within the supply chain ecosystem.

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Want to learn more? Check out this blog post.

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