Difference between revisions of "Purchase order"

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Once a buyer and a seller have finalized their negotiations in the so called [[Procurement Offer Phase|offer phase]] a legally binding contract is created between them. From such a contract one or multiple pairs of '''procurement orders''' and [[Customer Order|customer orders]] can be spawned. The procurement order is the business object on the customer side, the customer order is the business object on the vendor side. They are bound together through the b-op network, if both participants have their [[Digital|b-op digitals]] and they share enough trust.
[[File:Purchasing Process.png|thumb|Purchasing order contracting process]]A purchase order is a '''one sided declaration''' of a customer towards a supplier, which requires a contract to exist to be legally binding for the customer and the supplier side.    


If there is not an existing contract that governs the relationship between buyer and seller, the procurement order can be used in place of a contract. This offers legal protection for both buyer and seller. Each purchase order is assigned it’s own unique number, known as the procurement order number.  
== Interaction with suppliers / Contracting ==
Before a purchase order is created by the customer, the contracting phase is started, which means that customer and suppliers exchange offers until a mutual agreement is found ([[Purchasing contract|purchase contract]]).


Structuring the procurement orders, there are various types of purchase contracts, the most common are standard purchase contract and blanket purchase contract.
<u>Purchase order, created with contract reference (master contract based purchase order)</u>


== Purchase Contract Basics ==
Once this [[Purchasing contract|purchase contract]] exists, a purchase order can be filed from the customer to the supplier with a reference to this contract. In this case, the supplier's digital only checks if the [[Customer Order|customer order]] positions and conditions adhere to the contract and can auto-approve it.
All purchase contracts share certain common requirements, and should ideally contain as much detail as possible. That’s because once a purchase contract is formally accepted by a vendor, it becomes a ''legally binding agreement'' between the vendor and the purchaser. In general, purchase contracts should contain:


* Detailed and complete vendor information
* A detailed description and quantity of goods or services to be purchased
* Quality specifications
* Full pricing information as agreed upon between buyer and seller side
* Delivery terms and conditions
* Payment terms and conditions


== Purchase Contract Varieties ==
Different types of purchase orders fulfill specific purposes.


=== Standard Purchase Contract ===
<u>Purchase order, created without contract reference (Individual purchase order)</u>
When you are making a one-time purchase create a standard purchase order. It’s the most common type of purchase order, and the simplest. Basic purchases, like replenishing office supplies, are of this type.


=== Planned Purchase Contracts ===
Purchase orders can also be filed to the supplier without a contract reference. In this case the positions and conditions of the purchase contract are considered to bear a purchasing contract proposal. The purchase order is showing a [[Customer Order|customer order]] on the supplier side, which is subject to approval on the customer side. Once approved by the supplier, the system automatically forms a purchasing contract and links the purchase order and the customer order to this contract.
When you are partnering with a single supplier as your sole source of specific goods or services, this type is right. You can create a single contract, and then schedule purchase orders released during the timespan of the contract. This contract type has the benefits, that you and the vendor can plan regarding liquidity demand (you) and stock demand (vendor).


=== Blanket Purchase Contract ===
For more information please read up the [[Dev:Purchase order processing|purchase order processing]] article.
When you are partnering with a defined supplier, but you’re not sure about your precise time frame or quantities required, use this type of contract. ''Blanket Purchase Contracts'' typically have a limited quantity ceiling and cover a specific period of time. They’re useful in locking down pricing terms with a given vendor before making purchases from them.  


=== Long-Term Purchase Contracts ===
== Purchase orders in the b-op network ==
Rather than a binding legal agreement for a specific purchase, contract purchase orders create a high-level, ''long-term'' agreement. This legally binding contract spells out in detail the exact terms, pricing, and conditions of all purchases made from the supplier by your company, but not specific purchases themselves. They might not have an expiration date, and the framework itself lets you issue standard Purchase Orders that conform to the terms and conditions established within the contract purchase order.  
When transmitted to a supplier by the [[Dev:B-Op supply chain network connector|B-Op supply chain network connector]], a purchase order is transformed within the b-op network to a [[Customer Order|customer order]].   
{| class="wikitable"
 
|'''ASPECT'''
ZUGSEIL software also supports non b-op based supplier relationships. In this case, the [[Dev:B-Op supply chain network connector|B-Op supply chain network connector]] always assumes that the supplier accepts the order and creates a contract and the expected deliveries and shipments as proposed by the customer.  
|'''STANDARD'''
 
|'''PLANNED'''
== Structure ==
|'''BLANKET'''
Each purchase order has the same structure containing a header and one or multiple positions. The '''header''' holds information, which regulates general information like target supplier and holds status information. On '''position''' and '''subposition''' level the information on the products to purchase and the requried [[Delivery option|delivery options]] are defined.
|'''LONG-TERM'''
 
|-
For more information please read up the [[Dev:Purchase order processing|purchase order processing]] article.
|Established Terms & Conditions
== Related Articles ==
|YES
 
|YES
* [[Procure-To-Pay]]
|YES
* [[Purchasing contract]]
|YES
 
|-
== Related development articles ==
|Goods & Services Specified
* [[Dev:Purchase order processing]] - Developer information page on purchase order
|YES
 
|YES
 
|YES
[[Category:Glossary]]
|NO
|-
|Pricing Specified
|YES
|YES
|POSSIBLE (Price-Steps)
|NO
|-
|Quantities Specified
|YES
|YES
|POSSIBLE (Price-Steps)
|NO
|-
|Account
|YES
|YES
|NO
|NO
|-
|Established Delivery Schedule
|YES
|POSSIBLE
|NO
|NO
|}

Latest revision as of 11:40, 6 July 2024

Purchasing order contracting process

A purchase order is a one sided declaration of a customer towards a supplier, which requires a contract to exist to be legally binding for the customer and the supplier side.

Interaction with suppliers / Contracting

Before a purchase order is created by the customer, the contracting phase is started, which means that customer and suppliers exchange offers until a mutual agreement is found (purchase contract).

Purchase order, created with contract reference (master contract based purchase order)

Once this purchase contract exists, a purchase order can be filed from the customer to the supplier with a reference to this contract. In this case, the supplier's digital only checks if the customer order positions and conditions adhere to the contract and can auto-approve it.


Purchase order, created without contract reference (Individual purchase order)

Purchase orders can also be filed to the supplier without a contract reference. In this case the positions and conditions of the purchase contract are considered to bear a purchasing contract proposal. The purchase order is showing a customer order on the supplier side, which is subject to approval on the customer side. Once approved by the supplier, the system automatically forms a purchasing contract and links the purchase order and the customer order to this contract.

For more information please read up the purchase order processing article.

Purchase orders in the b-op network

When transmitted to a supplier by the B-Op supply chain network connector, a purchase order is transformed within the b-op network to a customer order.

ZUGSEIL software also supports non b-op based supplier relationships. In this case, the B-Op supply chain network connector always assumes that the supplier accepts the order and creates a contract and the expected deliveries and shipments as proposed by the customer.

Structure

Each purchase order has the same structure containing a header and one or multiple positions. The header holds information, which regulates general information like target supplier and holds status information. On position and subposition level the information on the products to purchase and the requried delivery options are defined.

For more information please read up the purchase order processing article.

Related Articles

Related development articles

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