Are you using Purchase Orders (P.O.’s) in your shipping process? You may feel like it’s just another form to complete but it’s so much more than that. When handled properly, purchase orders can improve the efficiency of your supply chain and your overall operations. What makes them so important in the shipping process?
What is a purchase order?
According to businessdictionary.com: A purchase order is “a buyer-generated document that authorizes a purchase transaction. When accepted by the seller, it becomes a contract binding on both parties”. “A purchase order sets forth the descriptions, quantities, prices, discounts, payment terms, date of performance or shipment, other associated terms and conditions, and identifies a specific seller.”
Below is a brief discussion of the most typical information that you should include in a purchase order and its significance in the shipping process, if applicable.
Price: Negotiate the best possible unit price for the product you are purchasing. This is especially important if you’ll be importing it. The total value of your shipment will impact the amount of fees, taxes and duties.
Quantity: Specify the quantity you’re ordering and any variance (where appropriate) that is acceptable.
Description: Be sure to provide a detailed description of the product(s) you are purchasing to prevent any misunderstanding between you and the seller.
Latest ship date: The latest acceptable ship date is very important and should be clearly marked on your purchase order. It can be especially critical when you’re dealing with imports that are needed by a certain date. You’ll want to allow sufficient time for shipments to consumers in time for holidays or other time-sensitive events such as the start of school.
Mode of transportation: Always clearly specify the shipment point or shipment method on your purchase order. Whether you are buying CIF, FOB or Ex work make sure that you include all related details. Be aware of the different costs associated with each option before selecting one.
Terms of sale and method of payment: This information is simpler for domestic shipments. When it comes to international shipments there are more considerations involved. Regardless of the details, be sure to include them on your purchase order.
Shipping specifications: Be sure to include shipping specifications. This will allow for easier calculation of your shipping costs. It also helps when determining how much product will fill a shipping container or truckload.
Marking requirements: This information is especially important when importing products. US customs, and government agencies involved in importing, have their own marking requirements. Be sure to check with the appropriate agencies and note the necessary requirements on your PO so that your shipment is compliant.
Special Instructions: These instructions might relate to additional details pertaining to packaging, labels, other specific marking requirements and more.
Of course, once you have finished preparing your purchase order, you should proofread it before sending it to the seller. An error could be quite costly!
As you can see, there are many details included on a complete purchase order. Utilizing these legally binding documents in your procurement process can ensure that your shipment arrives when and how you expect it. Need assistance working through some of these details? American Group has years of experience and can assist you with all shipping-related aspects of completing your purchase orders. Give us a call at 866.553.6608 or email us at Rates@ShipAG.com for help with your next shipment.