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What is a purchase order confirmation?

Whenever a buyer places an order, a purchase order is issued. The supplier in turn generates a purchase order confirmation to confirm the purchase order. 

What is a purchase order?

A purchase order (PO) is an administrative document that specifies the quantity, quality, unit and total price of goods or services that suppliers must provide.  The purchase order also states the general terms and conditions such as delivery terms, price, payment terms, payment means, legal conditions etc.

What is a purchase order confirmation?

 A purchase order confirmation (POC) is the conclusion of the negotiation between a buyer and a supplier about the sales price and delivery date and hour of a purchase order a buyer sent. The confirmation outlines the acceptance (total or partial) of the conditions set by the buyer in the purchase order. If the purchase order confirmation confirms the purchase order totally, then the parties are legally bound to the transaction as per the terms set therein.  

Why is a purchase order confirmation important?

Purchase order confirmations serve a legal as well as an operational function ensuring smooth procurement activities. 

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What is OCR?

Optical Character Recognition (OCR) is a technology that enables you to convert different types of documents, such as scanned paper documents, PDF files or images captured by a digital camera into editable and searchable data. 

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What is OCR used for?

OCR technology is used to convert different kinds of images containing written text (typed or printed) into machine-readable text data. Instead of retyping a written text manually, you can convert all the required materials into a digital format within several minutes using a scanner (or a digital camera) and Optical Character Recognition software. 

When is OCR used in procurement?

In procurement, OCR is mainly used to scan and digitise information from, for example, printed invoices, purchase order confirmations etc. That means it is used to capture documents and incorporate data into the downstream systems. 

How does OCR work?

Using OCR software involves three steps:  

Step 1: Pre-processing the document image 

Step 2: Character Recognition  

Step 3: Post-processing the document image 

Main disadvantages of OCR

• Expensive  
• Low accuracy, mistakes are likely 
• Labour-intensive to correct mistakes created by OCR 
• Not all documents can be processed 

Alternative to OCR: The Netfira Platform

OCR vs. the Netfira Platform

	OCR	Netfira Platform
Costs	The software is expensive, special scanning hardware needed, training, materials and staffing costs	SaaS solution: Minimal investment costs
Accuracy	Low accuracy, mistakes are likely	Very high data accuracy, hardly any errors through AI
Correcting errors	Labour-intensive	AI is capable of learning and is becoming more and more precise, check and correct discrepancies easily
Scope of application	Only works with specific formats	No restrictions, AI can also work with and structured unstructured data

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What is EDI?

Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents in a standard electronic format between business partners. 

What documents can be exchanged via EDI?

The most common documents exchanged via EDI are purchase orders, invoices and advance shipping notices. But there are many others such as bill of lading, customs documents, inventory documents, shipping status documents and payment documents. 

What EDI standards are there?

There are several EDI standards in use today, including ANSI, EDIFACT, TRADACOMSand ebXML. For each standard there are many different versions such as ANSI 5010 or EDIFACT version D12, Release A. 

Why are EDI standards needed?

Since EDI documents are processed by computers instead of humans, a standard format must be used so that the computer will be able to read and understand the documents. A standard format describes what each piece of information is and in what format (e.g. integer, decimal, mmddyy). 

How does EDI work?

Sending EDI documents involves three steps:  

Step 1: Prepare the document 

Step 2: Translate the document into EDI format 

Step 3: Connect and transmit your EDI document to your business partner 

Main disadavantages of EDI

• Lack of flexibility: Restrictive standards and formats 
• Expensive for businesses and their connected partners 
• Not all trading partners can connect to EDI 
• Complex technology 

Alternative to EDI: The Netfira Platform 

EDI solution vs. the Netfira Platform

	EDI	Netfira Platform
Basic functions	Transmission of standardised data	Automatic document and data processing including all document types
Flexibility	Document exchange based on restrictive standards and formats	No standards or formats
Costs for connected business partners	Too expensive for a lot of suppliers	No costs for connected trading partners
Project costs	Time-consuming and costly to set up	SaaS solution: quick implementation and low costs
Connection of business partners	Not all partners can connect, high barriers	All important partners can connect easily and quickly
Technology	Complex, IT or external EDI service provider needed	Netfira Onboarding App: business partners can be connected without IT or external service providers

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