PO Approvals That Stop Overbuying

Walk into the bodega of any trading business that has been running a few years and you will find it: the wall of stock nobody remembers ordering. Forty boxes of a tile that stopped selling. A pallet of fittings bought because the supplier offered five percent off for volume. Cash, sitting on shelves, turning into dead stock. Overbuying is rarely one bad decision. It is the absence of a checkpoint between wanting stock and paying for it, which is exactly what a PO approval flow installs.

Why does overbuying keep happening?

The purchaser is busy. A supplier agent calls with a deal. A branch manager swears they are about to run out. Someone orders from memory instead of from numbers, and memory says order plenty, because the purchaser gets shouted at for stockouts and never for overstock. Each order is defensible on its own. The pattern only shows up months later as a cash flow problem wearing an inventory costume. If your money is on the shelf, it is not in the bank paying suppliers or funding the next branch. And every peso of excess stock is a peso your Net 30 suppliers effectively lent you, spent on shelf decoration.

Draft, review, approve

The structural fix is to split purchasing into three steps with different owners:

• Draft. Anyone authorized can raise a draft PO. Better, the system raises drafts itself when SKUs hit reorder points. A draft costs nothing and commits nothing.
• Review. The reviewer sees the draft next to the numbers that matter: current stock on hand across all branches, quantity already in transit, sales velocity for the last 90 days, and open POs with the same supplier. Ordering 200 units of something with 300 on hand and 45 sold a month suddenly looks like what it is.
• Approve. The owner or a designated manager gives final sign off above a peso threshold, for example any PO over ₱100,000. Below the threshold, the reviewer's approval stands, so the owner is not a bottleneck for routine restocks.

This is not bureaucracy. A draft to approval cycle can take an hour. What it removes is the single person, single moment decision where all overbuying lives.

Supplier ledgers as institutional memory

The second half of the fix is memory. A supplier ledger records every PO, every delivery, every invoice and payment against that supplier. When the agent calls with a volume deal, your reviewer can see in seconds that the last volume deal from this supplier took seven months to sell through, or that they still owe you two short deliveries. Purchasing stops being a relationship managed from recollection and becomes a relationship managed from record. The deals get better, because you negotiate from facts. It also ends the duplicate payment problem, where a supplier invoice gets paid at head office and again at the branch, because there is finally one ledger everyone is looking at.

What changes in the first ninety days?

Businesses that install this flow tend to see the same sequence. First, duplicate and panic orders disappear, because in transit stock is finally visible. Second, order quantities shrink toward actual velocity. Third, cash appears. Not new revenue, just money that used to be parked in excess stock now sitting in the bank. If your purchasing today is one trusted person and their instincts, you do not have a purchasing process. You have a purchasing personality, and it does not scale to a second branch, let alone a fifth. The transition is also easier than owners fear. Purchasers resist for about a week and then become the flow's biggest defenders, because it protects them too. When the owner asks why the bodega is full, the answer is a record of who approved what, with the numbers that were on screen at the time. Accountability cuts both ways, and good purchasers have nothing to hide and plenty to gain.