Ordering , Post Ordering Systems


(2) Ordering System : After the offers (quotation / tender) are received and evaluated in respect to their fulfillment of the organizational requirement the appropriate supplier for his quoted rates is selected.

This is expressed in terms of  the buyer placing the formal purchase order on him.

The purchase order containing suitable business terms and conditions is now a binding contract between the buyer and the supplier.

A typical Purchase Order contains the following particulars:

(a) Purchase order reference number , as a communicating mode between the supplier and the buyer for linking of various subsequent correspondences,

Material description with detailed specifications,
(c) Quantity ordered
(d) Required Delivery schedule,
(e) Price , discounts, taxes and duties applicable
(f ) Terms and conditions of purchase in details
(g) Destination where the materials are to be delivered (usually the name and  address of the consignee),
(h) Shipping instructions,
(i ) Authorisation of  the Materials Manager who signs the purchase order


The Purchase Order is made in multiple copies that are sent after their release from the Materials Manager to several agencies such as :

i) Supplier , with the original and a copy which the supplier is supposed to sign and return to the buyer as a mark of acceptance of the P.O.

ii) Indentor , as an information of order placement and for taking steps as provided for in the P.O.
iii) Finance ,
for making payment as per the provision of the P.O.

iv) Consignee , for receiving the material and clearing it for subsequent use by the organization
These are the indicative lists and not the exhaustive one 

(3) Post-Purchasing System : Purchase orders are placed for getting material or service. As such after P.O. placement , follow-up with suppliers , receipt  of material and making payment ,once the materials have been received are involved.

Generally, in case of relatively big orders, many small jobs are required to be done as part of follow up with the supplier. Since after the P.O. the executive authority (usually the Indentor) comes into play , action such as receipt and clearance of drawing with supplier, clearing various doubtful issues contained in the P.O., at times, are involved. Also since the P.O. indicates a clear delivery schedule , the buyer is often required to chase up for ensuring that. In the process, the following action may be required:

i) Receipt and clearance of drawing and documents submitted by the supplier



ii) Inspection , in part or full, of the material being manufactured by the supplier
 Handing over of site to the supplier to effect installation and commissioning
iv) Making available the necessary Goods carrying documents to the supplier

Inspection of the manufactured goods is often a major post purchase order activity. Large organizations usually have locational offices called site offices spread across the country for carrying out inspection, ensuring dispatch of material and liasoning with many other agencies. Critical items require regular follow-up with the supplier. A few organisations  operate with decentralised inspection facilities for on-the-spot inspection and acceptance. Purchase Order (P.O.) status reports are prepared so that follow-up is done where ever required.
Once the material is received at the described site final inspection is carried out for its acceptance. In the process, adequate documentation is generated. On the basis of the item code , proper identification tag etc is attached. In fact , now the procedure is taken over by the Stores / Warehouse wing.

Payment release : The supplier also sends the invoice for the materials supplied for payment. On receipt of it the invoice is matched against the receipt details, quantity accepted etc so that payments can be made as per the agreed term of the P.O. Normally, invoices are sent to the finance department who releases the payment after following the procedure at its end.

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