Disadvantages Of Purchase Order

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2.1 PURCHASING ORDER SYSTEM
A purchasing order (PO) is a commercial document and first official offer issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services. It is used to control the purchasing of products and services from suppliers. The issue of a purchase order does not initiate a contract. If no prior contract exists, then it is the acceptance of the order by the seller that forms a contract between the buyer and seller. Purchase orders can be an essential part of ERP system orders. According to business dictionary, 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. Then, a purchase …show more content…

This slight mistake can cause a big problem on amount of stock and also wasted the money when doing the production product. If company have a good relationship with customers, company can immediately follow up to admit the mistake and rectify the order. This can save company from considerable hardship in the long run. Then, company should give the speed of transactions because ordering errors and require checks and balances that throughout company supply chain. However, adopting a protocol that allows for approval from more than one person is one safeguard against mistakes like this in the …show more content…

After follow that step, purchaser need to add other step before key in database. According to flow chart at Figure 2.1 (b), purchaser need do double check in system before key in databases or record. A good ordering system will help maintain satisfactory supplier relations, improve cash management, aid in inventory control, and increase the overall profitability of company.

Besides that, Permintex Sanko also needs to do the manual method like keep in log book. After keep in the data, employees need to record in log book. This can be as plan recovering if crash data happen in future. This log book also is very important to track back PO number. However, log book also can control the mistake happen when purchaser able to trace back the flow of purchasing order and detect the mistake. This one of corrective action and prevention plan can reduce the mistake for accident

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