by Jacob Yount
When placing an order, it is common for the promotional product buyer to send a Purchase Order to their China vendor.
Does your vendor care about the Purchase Order?
Do YOU care about the Purchase Order?
Most likely you put more emphasis and importance on your purchase orders than your supplier in China will place on the document.
This document is sent to the factory from the buyer whenever the buyer gives the green light to start manufacturing the order.
In the buyer’s mind, this document is authoritative, provides official confirmation, specifications, and sufficient proof to start purchasing material and commence mass production.
If the job is a reorder and there is a strong working-relationship with a vendor, then a purchase order may very-well suffice.
If it’s a first-time order either with the factory or you do not order frequently from this factory or it’s a new or customized item, then a purchase order is not going to hold much sway.
Typically the promotional product buyer does not place many reorders of the same item. Whether structurally or from a branding perspective, items ordered are highly customized. The promotional product buyer imports from a wide range of vendors.
I’m getting to my point….
–Their own quotation, i.e. the quotation the supplier sent to you. This is what they will refer back to time and time again, even if it differs from their invoice.
–Their own invoice or Proforma Invoice. This is what will have the pricing, the amount due for deposit and balance, perhaps some confirmed product specs and of course the supplier’s bank detail.
If the supplier is responsible, their invoice will include all specifications that are in their quotation and that have been confirmed during the approval process. You should make sure of this. This is not an official “contract” but for the purpose of importing promotional products from China, this is generally the most official document you can hope to get.
My humble opinion is that for the promotional product buyer the purchase order should simply be a green light that shows you are ready to start the order.
The document probably serves more purposes internally in your own company than it does with the vendor.
* Unless you have a very strong working relationship with the factory, they WILL NOT start the order based on the purchase order. They will start the order based on the deposit. Thus again, their invoice holding sway because it has their bank detail.
The bank detail is the channel that assures the supplier receives the payment. Receiving the payment trumps receiving a Purchase Order.
The Purchase Order holds sway domestically. Domestically an onshore supplier receives the document and can start the job. If for some reason the buyer backs out of the job, the domestic vendor has more recourse.
Without the deposit in-hand, what recourse will the Chinese vendor have who purchased material and started production if the buyer back out?
* If you include specifications or requirements on the purchase order that were not in the supplier’s quotation, invoice or confirmed sample, the supplier may ignore the points.
If what now has been “slipped” in under the lines on the Purchase Order was not discussed beforehand and has bearing on the price, the supplier is in the right to modify pricing accordingly.
Ouch! and right before the order was about to open too…
Imagine the scenario: you include specific packing on the Purchase Order that was not stated on the quotation or the supplier’s invoice.
The supplier does not read this on the Purchase Order (because, frankly they don’t really regard the document).
The order is completed, you receive the QC report and the packing requested in the Purchase Order is not to be found.
You inform the vendor that they missed your requested packing and they tell you that this additional packing was not considered, it will be additional cost and the order is going delay leaving the factory.
You then proceed to do an ALL CAPS breakdown via email on the supplier…
* Make sure the Purchase Order lines up exactly with the supplier’s invoice. Thus my earlier thinking that the document, if not a reorder, becomes somewhat redundant.
* If the Purchase Order does not line up exactly with the supplier’s invoice; this shows where a breakdown in communication may have occurred during all the confirmation stages. In other words, if the supplier doesn’t know such and such was expected…why not?
* Does your purchase order include internal codes, reference numbers and wording that are not relative to the order? Do your payment terms say “net 30” because this is what you generally do domestically?
For example, if you usually order domestically and there are certain codes or tags used with domestic vendors, why are these same points of info included for your offshore supplier?
You may say, “well, that’ just template” or “just disregard”…but you see, this proves my point. Now it’s just electronic clutter and the more clutter, the more irrelevant the document becomes to the suppliers’ eyes.
This also shows the buyer not treating the document with the importance that it deserves – if in fact in you are going to send the document.
Sort of, if you are going to send it, why not make it correct?
Keep in mind that if you issue a PO that does not line up exactly with what was previously confirmed and there turns out to be a production issue…I can see it happen… in some form or fashion, your vendor will use that against you whenever their documentation also does not line up.
“You’re wrong, we’re wrong, let’s be wrong together.”
Make the Purchase Order professional and line up exactly with the documentation that the supplier is going to use.
Spend some of your preproduction energy making sure the final quotation from the supplier and the supplier’s invoice (the document with the price and bank detail on which you make the deposit) include everything that is required and pertinent to a successful order.
Experience tells me the order is going to be smoother if you carefully check the suppliers’ documentation instead of ASSUMING they will check yours.
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