The purchase order process

THE PURCHASE ORDER PROCESS

The mechanics of the buying process is iniciated by a requisition or other definition of need form within the organization.

The buyer will analyze the requisition andultimately complete it by adding the pertinent purchase data.

In order to do this, several key items listed below need to be available the buyer:

• Supplier identification records,containing source of information and adresses.

• Supplier profiles for major suppliers, listing key contact people, phone numbers, e-mail addresses, Web sites and the like.

• Price historyrecords that are essential, and wich should include alternate suppliers and their current pricing information.

The fundamental steps to complete a purchase data are the following:

1. Editingthe requisition

2. Making purchase decisions

3. Issuing the purchase order (PO)

4. Issuing change notices

5. Receipt of order acknowledgment

6. Follow up and expenditing7. Invoice reconciliation and approval

8. Correnction or charges if needed

9. Recording purchase transaction and closing PO

Editing the requistion

Today this data is frequentlytransmited electronically over intra-company computer networks, or sometimes via facsimile.

The buyer must first indetify on a requirement those items that must be acted on quickly. Upon making thepurchase decisions, buyers add this information to the requisition that ultimately becomes the basis for the purchase order: suppliers name, unit price, order dollar value, agreed delivery date, FOBshipping terms, shipment method and terms and conditions including payment.

Issuing the purchase order (PO)

Is the legal document by wich buyers commit their company to pay for desired purchases.There are more than 20 known types of contracts that can abe divided into three major categories:

• Fixed Price, is the most common type of contract and can be used to buy anything....