Summary Procurement process part 2

International sales & procurement


Procurement 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