Streamline Aviation Procurement with Purchase Order Automation–Reduce Errors, Shrink Timelines, and Slash Costs

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Working in the aviation industry involves a lot of shopping. With a continuous need for new parts, replacement parts, and spare "just-in-case" parts, there's a relentless flood of purchase orders (POs) to manage.

This amounts to $24.65 billion in total spend by MROs on aviation parts alone. Add in technician labor, transportation, storage fees, insurance, and other related costs, and the storm of paperwork turns into an avalanche.

In this high-dollar, highly regulated industry, precision is key in all operations—including the purchasing process. Any errors in the purchase order (PO) process can lead to operational delays, AOG (aircraft on ground) events, and major losses in revenue and customer trust.

Using an automated purchase order system can minimize many common reasons for PO errors, such as manual data entry mistakes, lack of automation, poor communication with suppliers, and an inconsistent purchase order approval process.

This article will examine ways aviation businesses can streamline and enhance the purchasing process with AI to increase productivity, shrink purchasing cycles, and improve overall business efficiency.

What is a purchase order?

First off, let's agree on what a purchase order or PO is. A purchase order (PO) is a formal document given by a buyer to a seller. It provides details necessary for the seller, such as what products or services the buyer needs, how many they need, the prices they agreed on, and where to send them and bill for them.

The purchase order serves as a legally binding agreement for both parties as a formal part of the procurement process, and it clearly lays out both parties' responsibilities. POs are critical to preventing misunderstandings and enabling smooth business operations.

In the aviation industry, purchase orders are especially critical due to the industry's rigid safety standards and regulatory requirements. Accurate documentation of all parts and services is a must to ensure aircraft airworthiness and maintain a clear audit trail that proves business compliance.

Firm orders vs. options

Diving in further, there are two distinct types of purchase commitments when it comes to procurement: firm orders and options.

• A firm order is a binding agreement between a buyer and a seller, obligating the buyer to purchase specified goods or services under agreed-upon terms and obligating the seller to fulfill it. Once placed, it commits both parties to the transaction, ensuring the seller provides the goods or services and the buyer completes the purchase.
• An option grants the buyer the right, but not the obligation, to purchase goods or services at predetermined terms within a specified timeframe. This allows the buyer to secure terms without committing to the purchase immediately, providing flexibility to decide later based on needs or market conditions. This can greatly speed up the re-order process.

Automation of purchase orders

Purchase order (PO) automation streamlines the creation, approval, and management of purchase orders for both firm orders and options.

• Firm orders can be generated using automated systems based on inventory levels, shifting demand forecasts, or predefined procurement schedules. This ensures timely replenishment and optimal stock levels.
• Options: While options are less common in general procurement processes, they are quite common in the aviation industry. Automated systems can track option agreements, monitor expiration dates, and alert procurement teams when decisions are needed, facilitating timely conversions of options to firm orders.

Conversion of options to firm orders

With an automated system, options can easily be converted to firm orders when the buyer decides to exercise the option within the predefined timeframe.

The conversion involves formalizing the buyer's commitment to purchase. In this case, a purchase order is issued, automatically references the original agreement and highlights the terms for any options.

Automated systems can manage the purchase process by:

• Tracking: Monitoring option agreements and their respective timelines.
• Alerts: Notifying procurement teams of upcoming deadlines to exercise options.
• Processing: Transitioning from an option to a firm order by generating the necessary documentation and approvals.

Four steps to implementing purchase order automation

Successfully implementing purchase order automation in the aviation industry isn’t just about swapping out manual processes for digital ones. It requires a clear plan, the right tools, and seamless integration with existing systems. Here's how to make it happen:

1. Choose the right purchase order automation software

The first step is selecting a platform designed to meet the needs of the aviation industry. Look for solutions that offer features like real-time tracking, AI-powered demand forecasting, and streamlined approval workflows.

For instance, Inventory AI from ePlane is designed specifically for aviation procurement and integrates with all major aviation ERP systems. It has all the features MROs and Airlines need to track inventory, manage supplier relationships, and automate PO creation and approvals. 

2. Integrate your PO system with ERP and other systems

Automation doesn’t exist in a vacuum—it needs to work seamlessly with your existing enterprise resource planning (ERP) system, such as SAP, Oracle NetSuite, or IFS Aerospace & Defense. Integration ensures that purchase orders automatically pull data like inventory levels, supplier contracts, and maintenance schedules, minimizing data silos and eliminating duplicate entries.

For example, integrating RFID tracking into your ERP system can link parts inventory directly to POs. When a part is scanned for use or delivery, the system can trigger a reorder automatically, reducing delays caused by low stock.

3. Set up RFID, IoT, or other inventory tracking

RFID tags and IoT sensors provide real-time data visibility that drives automation in procurement processes. In an aviation MRO context, RFID tracks physical parts throughout the supply chain—ensuring precise location visibility for packages, whether in a warehouse or in transit. Meanwhile, IoT sensors monitor storage conditions like temperature or humidity to maintain compliance with safety and quality standards.

This data doesn’t just end at tracking. Integrated AI systems analyze inputs IoT sensors on aircraft assemblies to predict when a part might fail, triggering proactive maintenance or replacements. 

By forecasting expected and unexpected needs, these systems can automatically initiate reorders before inventory runs out, reducing AOGs and improving operational efficiency.

4. Train procurement teams on new workflows

Introducing  PO automation inevitably removes manual steps from the process. Procurement teams need to understand the new process and ensure they understand the failsafe if something goes wrong. How to detect anomalies, what to do when this happens? etc. Teams need to understand how the software works, including features like approval workflows, customizable dashboards, and error reporting tools. 

Training sessions should focus on:

• How automation will improve day-to-day operations and free teams from tedious, manual purchase order processes.
• Managing exceptions—how to log errors and where human oversight is required.
• Adjusting business rules (approval parameters) or thresholds for dynamic workflows.

Benefits of purchase order automation

There is a mountain of evidence, that procurement teams that automate purchase orders consistently report fewer errors and see major gains in purchasing efficiency. Here are some examples:

• 18% fewer days payable outstanding (DPO). This translates to about 5.5 days per year (Aberdeen Strategy & Research).
• Reduction in MRO costs. According to Boston Consulting Group, MRO costs can be as high as 4.5% of total revenue, and thus any reduction can have a significant impact.
• 49% savings in the costs associated with processing invoices. With an automated set-up to process invoices, purchase orders are processed more quickly and consistently. 
• Cost savings for early-payment discounts. Most vendors offer this discount, yet fewer than 21% of businesses can take advantage of it due to process inefficiencies.
• 4.11x as many invoices are able to be processed. Automating purchase orders enables businesses to process over four times as many invoices, accelerating the procurement cycle and ensuring that aircraft aren't grounded waiting on a missing part.

Case studies

Gulfstream Aerospace

Gulfstream Aerospace Corporation implemented an accounts payable automation project to address inefficiencies and rising costs associated with their manual invoice processing system. This initiative led to productivity gains exceeding 20%, significantly enhancing operational efficiency (ECM Connection).

AMP MRO Parts

AMP revolutionized its supply chain by automating purchase orders. AMP replaced manual purchase order management with a streamlined system that minimized human intervention, significantly reducing errors and accelerating procurement cycles. Parts arrived promptly, ensuring operations ran smoothly and costs were reduced. AMP saved an average of 20 minutes on each PO.

Per 100,000 purchase orders, that's a time savings of 2 million minutes or roughly 33,333 hours.

Automating purchase orders saves time, money, and headaches

In aviation, speed and precision aren’t luxuries—they’re watch words for the industry. Delays ground planes, and small data entry errors can cost millions. Purchase order automation brings speed and clarity to a slow, messy process. Purchase order automation streamlines approvals, tracksinventory needs, monitors supplier performance, and eliminates guesswork.

You’ve read the numbers. You’ve seen the facts. Now it’s time to act. 

ePlaneAI delivers the automation tools you need to transform procurement.

 Faster orders. Fewer errors. Total control. 

Don’t wait for the next delay to cost you millions. 

Schedule your demo today—and see automated aviation procurement in action.

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