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Summary Procurement process part 2
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Procurement process (part 2)
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International sales & procurementProcurement process (part 2)
Ordering
Purchase Order (PO)
What?
- A buyer-generated document
- Authorizes a purchase transation
- Identifies a specific seller
- When accepted by the seller, it becomes a contract binding on both parties
Why?
- Confirmation to the supplier that you want to ORDER a good/service
Terminology
- Purchase order (PO) – see also ERP course
- Synonyms: purchase order form (also PO or POF)
Contents
- Descriptions
- Quantities
- Prices
- Discounts
- Payment terms
- Date of performance or shipment
- Terms and conditions
See purchase order example on slides
, Alternative: Call-off (in case of framework contract)
What?
= a contract set up between the buyer and seller where there is an overall commitment to
purchase a given quantity of items/services over the period of the call-off contract
- The delivery time is made dependent on a call from the buyer
Example:
- Contract: 300 Ton
- Call off next week Monday for a truck 25 Ton
Ordering online
Entering your order online… Results into a sales order at the supplier side
Ordering online (as customer)… same P2P process??
Order quantity
Minimum order quantity (MOQ)
The minimum quantity of pieces that can / must be ordered
Depends on packaging quantity per 10, 20, 100 pieces
Example
- Box of screws
- Rolls of toilet paper
Minimum order value (MOV)
The minimum amount € $ £ .. for which a purchase must be made
Depends on the supplier
Minimum order amount per line ordered (per item ordered)
Minimum order amount per order
Economic order quantity (EOQ)
What?
- Ideal order quantity a company should purchase to
minimize inventory costs and order costs
- Balance 2 important sets of costs associated with
inventory
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