Ordering Systems

After deciding on the vendor to whom the order is to be placed, the Purchase Order (PO) is to be drafted. Since this is a legal contractual document that binds both the seller and the buyer to certain conditions, this has to be carefully and thoughtfully done. Inconvenient terms may have to be renegotiated. 

The purchase order should be typed without mistakes with all terms & conditions duly mentioned in it. Copies of this should be made available to the end-user department, stores and accounts. Since the whole process of preparing purchase order is long and cumbersome, many organisations have removed this process for any item which is very occasionally required and has value less than a specified amount. 

The purchase order typically should contain the following items : 

• The order number, serial number and date of order, 
• The name and address of the ordering company, 
• Consignee's name and address, 
• General terms & conditions of order, 
• Description of goods, its specifications and quantities, 
• Supplier's quotation reference and any other correspondence or MOM (Minutes of Meeting) in this regard, 
• Pricing terms and its billing terms, 
• Payment terms, 
• Delivery date and schedule, 
• Packing instructions, 
• Transport instructions, 
• Freight payment terms, 
• Insurance terms, 
• Warranty and guarantee terms, 
• Cancellation provisions and liquidator damage clauses, 
• Incoming inspection details and removal of rejections, 
• Bonus for early dispatch or zero rejections etc., and 
• Other special terms and conditions. 

Normally, the vendor acknowledges the order placed stating perhaps the terms not acceptable to him or the particular terms acceptable in modified form. Once the order is acknowledged, the vendor is legally bound to honor it, At the same time, the seller is also bound to honor it once it reaches the vendor.