Contents of Purchase Order and its importance

The customer sends a purchase order (directly to the sales person or to order management desk through mail or through electronic channels like EDI, web, email etc.). The contents of the purchase order received from the customer are compared with the following:

1) Prior contractual terms: Prices stated on the purchase order are compared with the prices quoted on the master contract signed with the customer. The taxation, payment and delivery terms stated on the purchase order are compared with the contractual terms agreed with the customer.

2) The quantity ordered is also compared against existing finished goods inventory, existing orders from other customers and it is assessed whether the goods ordered by the customer can be delivered as per the schedule requested by the customer.

3) A comparison is also made with the credit limit that is provided to the customer and how much goods/services have already been provided for which the payment is yet to be received

4) Whether the purchase order received is a not duplicate one. Processing a duplicate order results in the working capital getting unnecessarily stuck apart from wasted fulfillment and shipping costs since the order has already been shipped or getting fulfilled against the copy of the PO received already.

In case any of the terms stated on the PO are different from those stated in the contract, the sales person or the order management gets in touch with the customer to request a modified PO. In case the quantity ordered cannot be supplied as per the customer schedule then the customer is contacted again and a new delivery date is negotiated with the customer. The customer then submits a new PO after cancelling the previous one.

If the credit limit provided to the customer is getting exceeded with the current order then the customer is asked to either pay the existing dues or bring down the value of the order so that the credit limit is not exceeded.

If the purchase order is found to be a duplicate one then it is cancelled as the previous PO received would already be in the process of getting serviced! fulfilled.

If no discrepancies are found in the purchase order then it is confirmed to the customer (thru mail/email/faxlEDI etc.). The act of confirmation indicates that the vendor/supplier can service the purchase order and supply goods as per the terms stated on the PO. It also automatically converts the purchase order as a one-off contract between the supplier and customer.

Subcribe on Youtube - IGNOU SERVICE

For PDF copy of Solved Assignment

WhatsApp Us - 9113311883(Paid)