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. It lays out the order’s crucial details. And then, once the brand and supplier accept the PO’s conditions, it 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. And 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. Warehouse and logistics teams will know how much stock they can expect and when they’re ready to ship. And lastly, your team can plan marketing promotions and distribution according to what needs to move based on current POs.
And 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 to add 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.
There are 5 types of purchase order forms that retailers use to run their operations and manage their supplier relationships:
The standard purchase order is a common form that includes basic transactional details like precisely what items you want, when you need them delivered, and where. This basic form is best for one-off needs and reactionary purchasing requests. If your business is running low on something, using a standard PO form can save you from a stockout.
Standard purchase orders work like going to a grocery store on the way home to buy a gallon of milk. Though you still need to make a more comprehensive grocery run soon, for now, this 1 gallon of milk can hold you.
Retailers might also use this type of form for seasonal packaging design or restocking a best-selling SKU for an upcoming marketing promotion.
Planned purchase orders are exactly what they sound like: They’re pre-scheduled. They work like a subscription with your preferred vendor.
On a planned purchase order form, your team includes the SKUs it needs, how many, and where those shipments are heading. Down the road, you’ll determine the exact delivery schedule. With this type of PO form, your brand can secure inventory without having all the details ironed out yet.
But wouldn’t suppliers hate this wishy-washy commitment? Not at all – planned purchase orders benefit the supplier since your business is committing to buying items or services from them regularly.
Back to our grocery example: Planned purchase orders are like signing up for an ongoing subscription for nut milk. Let’s say a gallon of almond milk covers your weekly needs, from morning coffee to afternoon oatmeal.
Your subscription secures your weekly gallon beforehand (let’s say you try out a 6-month subscription). You commit to a gallon a week for 6 months, but you only pay when you receive the next gallon. This reduces upfront costs. And if you run out early, you can rush your next shipment.
Aside from securing inventory for replenishment, planned POs also help retailers:
Contract purchase orders are a more formal version of the purchase order. This PO form details terms and conditions rather than exact items. This includes vendor details, payment, shipping, and delivery terms – but not what goods you want to buy or when.
Your team can use these POs to negotiate vendor contract terms and establish your relationship. That way, both you and your supplier are clear on the terms and costs of working together before you officially start purchasing any inventory from them.
Blanket purchase orders are the most popular of all purchase orders. It’s the ideal purchase order form for recurring needs, like restocking bestsellers. With this type of PO, companies agree to order a general amount from a supplier over time without pre-scheduling those orders.
Niels Tervoort, Director of Supply Chain at Organifi and co-founder of Dermazen, uses planned purchase orders to manage inventory. His company agrees to purchase a million units, which he’ll receive and pay for over an extended time. This dynamic allows him to adapt faster to supply chain issues.
As you can see from Niels’ example, blanket POs are handy when you know your projected demand but want to spread out receiving the products over a longer period. This slower-paced delivery lowers upfront costs since you can make multiple payments over time. (You’ll also reduce holding costs by keeping less inventory on hand.)
Blanket purchase orders are a guarantee that the partnership will be ongoing. Retailers can use these agreements to lock in prices – even amid rising inflation – since the cost and number of units are pre-negotiated.
A blanket purchase order is also flexible, which gives retailers time to figure out what and when they will need to request from the supplier. For some retailers, it takes work to forecast demand. Tools like blanket purchase order forms can help businesses secure inventory as they figure out a changing market. For example, when a SKU’s turnover rate spikes unexpectedly during a pandemic, this PO form lets you quickly adapt and replenish your inventory.
A digital purchase order (DPO) is the paperless version of any of the 4 purchase order types mentioned above. Digital formats and a PO record system are easier to track and search when paired with the right inventory tool (like Cogsy).
DPOs are also faster to build and process. Meaning, by ditching manual, paper POs cut down on your lead time and reduce mistakes that tie up your personnel.
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 vendor 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. Include the estimated delivery date (based on your contract), shipping costs, and shipping method (for instance, freight).
It’ll be important 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.
🔥 Tip: With Cogsy, you only need to record each supplier’s contact information once. The tool then saves that information, so you can add it to upcoming POs by simply selecting the vendor’s name from a dropdown list. If your point of contact changes, simply update that contact at any time.
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 that case, 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.
Cogsy’s purchase order feature generates optimized POs for you in seconds based on its restock recommendations.
These restock recommendations are based on your historical sales, real-time inventory levels, and future demand forecasts. And they ensure you get everything you need (and nothing you don’t).
🔥 Tip: Cogsy will even send you replenish alerts when it’s time to restock. That way, you never miss the ideal window to place your next purchase order.
All you have to do is check this auto-generated purchase order and hit “submit.” Most retailers submit their POs in 5 minutes (or less) with the help of this feature.
Prefer to build your POs from scratch? You can customize the Cogsy’s PO template to build your next purchase order from scratch.
Cogsy saves all your vendor contract information and SKU data in 1 place. So, filling out the repetitive order details is as simple as picking a supplier or product from a drop-down list. That way, you can control what goes on your PO and still submit your order faster.
Thanks to Cogsy’s expedited purchasing process, DTC brands save 20+ hours a week (on average). Plus, brands that lean on the platform restock recommendations achieve inventory optimization and unlock 40% more revenue on average.
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.