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