If you have never been part of the purchasing process, chances are you won’t know what a purchase order is or what a delivery order is. As a matter of fact, you probably won’t know that these 2 have nothing to do with each other. So, you might ask, “what are they?”
On the universal quote that “no question is a stupid question” I’d be glad to elaborate on this subject for you.
The Purchasing Process
Purchasing is the process of buying goods and services. The purchasing process can vary from one organization to another, but there are some common denominators.
The process usually starts with a requirement or need. A requisition is generated, which consists of the details and specifications of the requirement and is sent to the procurement department. A request for proposal (RFP) or request for quotation (RFQ) is then raised. Suppliers send their quotations in response to the RFQ. At this stage, the price, availability, and quality are weighed up and put in the purchase order.
Purchase orders are normally accompanied by terms and conditions which form the contractual agreement of the transaction. The supplier then has to release the goods with the delivery order. An invoice is sent by the supplier which is then cross-checked with the purchase order and documents specifying which goods have been received. The payment is then made and transferred to the supplier.
What is a Purchase Order?
A purchase order (PO) is an agreement in document form sent from a purchaser to a supplier to authorize a purchase. It has to be approved by the company before leaving the hands of the purchasing department to the supplier.
A PO includes the name of the company purchasing the goods or service, PO number, date, address, invoice address, the description and quantity of the goods or services, price, and payment information.
There are different types of purchase orders:
- standard – a one time purchase
- planned – an agreement on a specific item at a relative date
- blanket – an agreement on specific terms and conditions: date and quantity and amount are not specified.
Probably the most important function in a business is the control of business purchases.
Every business needs to make purchases to get collateral into the business so that its processes can evolve and revenue can start coming into it.
During transactions, it is not uncommon for sellers to ship orders prior to payment. Sellers feel comfortable doing this because purchase orders also act as a form of risk and legal protection. In other words, if for some reason a buyer refuses to pay, the seller is protected by the PO, and it can be used as a binding contract between both parties.
What is a Delivery Order?
A delivery order (DO) is a release document from the buyer (consignee), or an owner or his agent which orders the release of the transportation of cargo to another party (mentioned in the bill of lading). It is the direct delivery of goods to a warehouseman who issues warehouse receipts. A delivery order should be clearly distinguished from a bill of lading: the delivery order is not a negotiable document, it is not evidence of receipt of goods, and it does not contain the provisions of the transport contract under which the goods are delivered.
According to the Uniform Commercial Code (UCC) a delivery order refers to an “order given by an owner of goods to a person in possession of them (the carrier or warehouseman) directing that person to deliver the goods to a person named in the order”.
A Delivery Order can be considered as the final step in the import cargo release process.
Purchase Order vs Delivery Order
By now you should either be well informed or very confused. There are no PO vs DO because they are worlds apart and just wave at each other as the ship leaves the bay.
You really just need to understand why both documents are needed. The Purchase Order is your first contact with the supplier and the Delivery Order is proof that there is a contract between the buyer and the warehouse where the goods are kept/stored.
A Purchase Order is a binding legal contract and a Delivery Order is not.
Amazing Facts About Deliveries:
The largest courier service in the world is the United Parcel Services (UPS), who delivers more than 12 million packages globally on a daily basis. The company started at the beginning of the 20th century, known then as American Messenger Company. It survived the Depression, world wars, and many other obstacles to become what it is today, thriving in the global age.
An amazing fact about food delivery & Australians in the north pole is the fact that Australians eat out 3.5 times per month. On the contrary when it comes to food delivery Aussies are more inclined to have their food and drinks delivered to them as they take out 4.1 times per month.
TNT(TNT Express is an international courier delivery services company) is known for their orange and white vehicles, representing dynamite. It actually stands for Thomas Nationwide Transport and not the explosive. However, they did use the fact that it has the same colours as a marketing tool. It was founded in Australia in 1946 by Ken Thomas and was later acquired by the Netherlands Company KPN in 1996.
In the olden days, pigeons were used to deliver letters, particularly in war times. There is evidence to indicate that this means of communication was used more than 3,000 years ago. It is said that this method started in ancient Persian civilizations. Julius Caesar and Genghis Khan were among the great leaders that had well-established carrier pigeon systems.
Horses have been important carriers in the history of transport. Before the use of motorized vehicles, a horse was a great asset and could be used to pull heavy weights. A horse and cart could be used to transport mail for great distances. The first evidence of a horse courier service available to the public was in the 15th century Europe.
Many other animals have been used to deliver large quantities of mail, i.e. camels, dog-sleds, and reindeer depending on the climate and area.
In ancient times human messenger was sent to an enemy to plot out terms for a war or settlement. At times rulers would kill messengers if they brought bad news, hence the phrase “don’t shoot the messenger”.