Navigating major operational processes (like creating purchase orders) is full of speed bumps. And a variety of external challenges make it even more complicated.
For instance, 60% of ecommerce brands continue to experience supply chain issues.
Even worse, those that are slowest to restock amid these challenges are more likely to stock out. Or they’ll over-order, trying to get ahead of their supply chain, but instead, they’ll find themselves overstocked.
Luckily, creating simple purchase order forms can streamline your procurement process and prevent these common ordering mistakes.
Learn how to create a purchase order form that’s guaranteed to help you replenish faster (or steal our free purchase order template).
A purchase order (PO) form is the document your business submits to a supplier to request an order of products.
Each PO lays out the order’s crucial details. And then, once the brand and supplier accept the PO’s conditions, that document becomes a contractual agreement.
Many purchase order forms are straightforward.
For example, a brand might request 100 units of a white, long-sleeve SPF shirt by August 15.
Once a supplier reviews the request, they can change the terms that don’t work for them (like if they can only deliver 80 of this product by that deadline). This gives your team a clear idea of what to expect when replenishing inventory.
Purchase order forms take time to put together, so many businesses defer to verbal agreements instead. While they take longer to compile, PO forms are a valuable process control tool.
It’s better in the long run for direct-to-consumer (DTC) brands to communicate and document the details of these kinds of business transactions.
That way, brands have all the specifics of each order, including units, quantities, variations, pricing, and delivery dates, and hold their vendors accountable for delivering those goods.
Not to mention, purchase order forms ensure there’s no scrambling when it’s time for financial audits.
Every business use purchase order forms a bit differently. Some retailers are exact, specifying each item’s description, precise quantity, unit price, and when they expect it.
Other brands use them to secure future inventory, promising to purchase units over time.
Suppose a retailer places several small-batch orders under a long-term agreement. After several months and the deadline nears, the terms of the initial deal might get fuzzy.
A purchase order form stipulating the product amounts and conditions can keep these important retailer-supplier relationships from spiraling into chaos and confusion.
Purchase order forms are necessary to keep your business operating – particularly because the submitted form formally requests inventory from your supplier.
When you know what products you need to replenish, you can detail all the specifics of those SKUs on a purchase order form. This includes documenting the amount of each product you need, prices, shipping address, and expected delivery date.
That said, all businesses operate differently. So, you and your supplier must agree to each other’s terms.
That way, the final contract considers how both companies operate and reduces potential miscommunication.
PO forms are a strong foundation for building a good supplier relationship and effective internal purchase order processes.
The many specifics in purchase order forms provide complete transparency about transactions between business owners and their suppliers.
This transparency inevitably curbs any future confusion because all that previously agreed-upon information in a PO form clears up:
With a purchase order, it’s easier to corroborate differences in an agreement. For example, suppose an order doesn’t arrive as you would expect – maybe the product quantity is off, or the product came in the wrong color.
Your PO form serves as a quick (and legal) document to help you verify errors with your supplier.
If the vendor claims they sent the right product quantity or color, this handy form can quickly settle it (and provide legal protection if needed).
Purchase order systems help you control and track spending, improving your records’ accuracy.
Plus, documenting your purchase orders in a standard way keeps all your transactional information easy to access and search.
When DTC brands use standardized purchase order forms, they have official records for their inventory purchasing history – and this is helpful for a few reasons.
For inventory management, your team can secure stock for upcoming months based on details from previous PO forms.
Also, warehouse and logistics teams will know how much stock they can expect and when they’re ready to ship. And your team can plan marketing promotions and distribution according to what needs to move based on current POs.
Plus, in the case of an audit or question about a particular transaction, the PO forms can answer:
Purchase orders standardize your transaction records. As you already know, this makes it easy to reference past purchasing decisions and the results.
When you use a PO form, you’ll get the same crucial details for your transactions every time. No more worrying about forgetting SKU specifics or missing an item description.
When there’s a transaction in question, you can simply refer back to it.
Purchase order forms also help you monitor what your business spends money on and when.
Best part? When you can easily review past transactions’ details, you can leverage that information in your inventory forecasts. That way, you can place purchase orders that align with inventory needs to prevent stockouts and dead stock.
Purchase order forms don’t just ensure vendors stick to your terms, though. They also prevent internal mistakes.
Using a PO form that requires your team to record specific details and limits who can complete the said form. These small checkpoints can prevent unnecessary expenses, saving your company big bucks over time.
For example, let’s say only a small group of managers who know the guidelines for completing a PO form can calculate inventory across your sales channels.
Your assigned team will know what to check for before placing an order. That way, your POs won’t be missing any crucial details, and you’re less likely to have extra inventory on the floor that risks going stale.
Purchase order forms will vary among vendors. These examples give you a better idea of each section’s goals. That way, you know what to pay special attention to as you fill it out.
We’ll work off Cogsy’s purchase order template to get you started (you can see the blank template above).
Each PO will have a unique number for your records and your vendor’s records. This way, each party can quickly reference the transaction.
List the product numbers (SKUs) to let the supplier know the exact items you want to order. This should distinguish variances among products like size, color, and so on.
Every product should have its own SKU. A great practice is adding a brief product description so whoever reviews the PO can easily identify what you’re ordering.
For example, next to SKU TOY08, you can add “LEGO Bumblebee Helicopter.”
List how many of each SKU you need and the cost per unit. For instance, in the purchase order template above, the buyer wants 488 units of SKU TOY08 at $117.09 per unit.
The line total summarizes the subtotal for a specific SKU. For example, if you need 488 of SKU TOY08 on line 1, and 1 unit of that SKU is $117.09 per unit, the line total is $57,139.92.
Fill out your company name and the shipping address of the warehouse where you want the products delivered.
Be sure to include the estimated delivery date (based on your contract), shipping costs, and shipping method (for instance, freight).
You’ll also want to include the shipping terms in greater detail within your contract. For example, you’ll want to add specific instructions on where to deliver products, like: “Deliver to door #5.”
Provide a point of contact at your company in case the supplier has questions or something goes wrong. You’ll want to appoint someone responsive and include their up-to-date phone number and email addresses.
|With Cogsy, you only need to record each supplier’s contact information once. Then, assign your “preferred vendor” for each SKU. Then, when you add a SKU to your PO, the tool will automatically fill out the corresponding vendor info, based on your preferences.|
Indicate what taxes apply to the PO. Then, add the tax amount to the sum of your line totals to calculate your grand total.
Read through vendor restrictions to ensure the PO follows their terms and your vendor agreement. Double-checking these details can prevent snafus and keep the relationship with your supplier strong.
Let’s say your supplier’s contract clearly states they don’t provide expedited runs, but you need a rushed order. This isn’t an option with your primary supplier.
So, rather than submitting this PO just for it to be rejected, you can skip straight to vetting other suppliers who might be up for this kind of order.
Clarify when payment is due. This is crucial to a good business relationship. You’ll also what to specify how you’ll be paying for the purchase order.
For example, a bank transfer or a credit card. These details may be in your contract (such as net 60-day terms).
In this scenario, it’s common to omit this information on the PO because your supplier will invoice you based on that pre-arranged agreement.
Make sure that the right person on your team (like a member of the operations or finance department) signs the purchase order form. This signature confirms: “Yes, we want these items and will pay for them in full.”
Once signed by both parties, this PO becomes a legally binding document.
When you team up with Cogsy, you get 24/7 eyes on your brand’s inventory. The actionable dashboard constantly monitors your current stock levels and historical demand, looking for emerging trends like shifting reorder points and optimal order sizes.
(Better yet, Cogsy identifies these trends more accurately and long before a human analyst.)
Using what it finds, Cogsy automatically emails replenishment alerts, notifying you that it’s time to reorder. This way, you can ensure you stay in stock – without constantly logging into your dashboard to check your inventory levels.
Whenever you draft a purchase order, Cogsy provides specific, data-backed restock recommendations based on your brand’s real-time inventory levels and forecasted demand.
These recommendations make ordering only what you need – nothing more, nothing less – a no-brainer.
Even better, you can bulk-add these recommendations with a single click.
This streamlined purchasing workflow saves Shopify brands 20+ hours a week on average. All while helping you build more accurate purchase orders.
No need to take our word for it. Try Cogsy free for 14 days.
You can absolutely build a purchase order template in Excel. However, manual entries require quality assurance processes to minimize human error. Just set time aside for a QA check.
A retailer creates a purchase order form to communicate a list of goods or services they want to purchase from a supplier. Separately, a supplier makes a sales order to confirm that it can supply the goods requested from the buyer or retailer.
A purchase order lists the goods a vendor would like to purchase from a supplier. A business creates an invoice to request payment for purchased goods.
You can create an endless number of purchase orders from one template. Just duplicate the template to create a new PO. That way, you don’t lose any of your historical records.