Introduction
With holiday season in full swing, operations leaders now face a balancing act between handling immediate fulfillment needs while preparing for the year ahead. As purchasing deadlines for Lunar New Year approach and seasonal demand fluctuations peak, ensuring purchase orders (POs) are approved and cut on time while also accounting for total costs, cash flow constraints, and strategic timing is critical. Quick, informed decisions can prevent missing delivery windows ahead of factory and port closures as well as committing to excess inventory that ties up capital.
Demand planning remains an essential part of this process, but leveraging technology to analyze key inputs, such as landed costs, can streamline decision-making and set the stage for healthy margins and sustainable, long-term growth. This blog post explores how automation and financial analysis can enhance the purchase order process ahead of the new year, helping businesses make smarter, more strategic decisions during this high-pressure season.
The Importance of an Efficient PO Process
Key decisions operations and finance teams make during the busy holiday season — what are optimal reorder quantities, how to time POs to align with supplier deadlines, and whether to expedite shipments to meet demand — impact cash flow, profit margins, and operational stability well into the future. A focused, efficient approach to inventory and purchasing ensures that resources are allocated wisely to meet both short-term demands and strategic goals. Clear prioritization of critical orders and strategic timing can help businesses avoid unnecessary costs and maintain cash flow stability.
Strategies for Optimizing Purchase Orders
1. Automate the collection and review of inputs that drive PO decisions
Purchase order planning relies on a web of inputs — inventory and component availability, sales performance, supplier lead times, and accurate, landed costs — that are often scatter across multiple systems and spreadsheets. This fragmentation forces operations and finance teams into cumbersome manual consolidation efforts that dump the aggregated data into yet more spreadsheets, making holiday purchase order planning time consuming, susceptible to stale or inconsistent data, and prone to simple human error.
By automating data consolidation, brands can bring all these inputs into a single, dynamic dashboard. Tools that automate data integration and consolidation not only reduce errors and save time, but also enable real-time visibility, which is critical during the fast-moving holiday season. With a complete and up-to-date picture of inventory position and sales trends, teams can make faster, more informed decisions about when and how much to order — avoiding stockouts, over-ordering, and unnecessary delays.
2. Use Landed Costs to Assess POs for Financial Feasibility
While demand planning is focused on forecasting what and when to reorder, brands must also determine whether the resulting POs align with cash flow considerations, budget constraints, and profitability targets. This starts with understanding landed costs -- the true total cost of an inventory investment associated with a PO, including product costs as well as fees for shipping, duties, and other expenses required to get inventory into the warehouse. Without an accurate and detailed view of these costs, businesses risk overspending, misallocating resources, or eroding profitability.
To determine whether POs align with financial goals, operations and finance need to break down landed costs into its key components. This granularity helps identify where dollars are actually being spent and whether this aligns with budget priorities. For instance, reviewing the freight component of landed costs might reveal opportunities to consolidate shipments, negotiate better terms, or delay orders to avoid peak freight surcharges during busy periods. On the flip side, a thorough understanding of landed costs can helps brands justify when expediting orders is necessary to meet demand without destabilizing finances.
Tracking landed cost trends over time is equally important. Fluctuations in material or freight prices can significantly affect the affordability of a PO. By modeling various scenarios—such as extending lead times to avoid seasonal cost spikes—brands can better balance operational needs with financial realities. Scenario planning enables proactive decision-making, ensuring that each PO aligns with broader profitability targets rather than simply meeting inventory requirements.
By combining detailed landed cost analysis with dynamic scenario planning, businesses can confidently assess whether their POs align with budget constraints and margin goals. This level of financial clarity ensures resources are allocated effectively, preserving both short-term inventory availability and long-term profitability.
3. Incorporate Returns into PO Planning
For brands coming off a successful holiday sales season and now planning POs for the new year, it’s critical not to overlook the impending wave of January returns. These returns can significantly impact inventory availability, near-term cash flow, and sales figures that directly impact demand planning for the next 12 months. Overlooking influence of returns risks creating surplus stock, tying up capital, and distorting profitability assessments, making it essential to integrate reasonable returns estimates into the end of year PO planning process.
Analyzing return rates by product category and sales channel helps refine reorder quantities, ensuring stock levels better align with actual demand. Additionally, factoring in the total costs of returns, including reverse logistics, restocking fees, and depreciation of returned inventory, provides a more complete view of their true financial impact. These insights allow businesses to adjust POs to balance anticipated inventory inflows with reorder requirements.
Incorporating historical return patterns into year-over-year sales analysis sharpens forecasts, helping brands make confident purchasing decisions despite post-holiday uncertainty. By accounting for the impact of returns upfront, businesses can avoid overstock, manage capital efficiently, and navigate supplier deadlines with clarity. A thoughtful approach to returns ensures POs are aligned with operational realities and profitability goals, positioning brands for a strong start to the year.
Conclusion
The holiday season intensifies the complexities of purchase order planning, requiring operations and finance teams to balance near-term inventory needs with strategic financial and operational priorities. As the year comes to a close, the pressure to make quick, strategic decisions is complicated by recent seasonal demand spikes, tight supplier deadlines, and cash and budgetary constraints. By streamlining data consolidation, leveraging detailed landed cost analysis, and incorporating return projections into planning, brands can build a more resilient, informed approach to planning and writing POs.
Platforms like Mandrel provide the infrastructure to transform these strategies into actionable processes, delivering the precise landed cost analysis and inventory availability tracking required automate complex reorder decisions. By integrating Mandrel’s capabilities, businesses can streamline purchasing workflows, eliminate manual inefficiencies, and make smarter, faster purchasing decisions. An efficient PO process doesn’t just meet immediate inventory needs—it ensures that each decision aligns with broader financial and operational goals. With Mandrel’s support, you can close out the holiday season strong and position your brand for sustainable, long-term growth heading into the new year.