2.3 Purchase Order (PO) Management

A Purchase Order is a legally binding contract, not a casual request for goods. Ambiguity in PO generation leads to price variances, delivery delays, and legal disputes regarding liability. This chapter defines the syntax of a valid PO and the non-negotiable requirement for Supplier Acknowledgement.

2.3.1 The Legal Contract 

A valid PO must contain:

• The Part Number: Dannie Internal P/N mapped to Manufacturer P/N.
• The Price: Standard Cost vs. Spot Price.
• The Date: The "Dock Date" (arrival at facility), not the "Ship Date."
• Incoterms: Defining the transfer of liability (e.g., DAP Dannie Dock).

2.3.2 The Acknowledgement Mandate 

A PO is considered "Unconfirmed" until the supplier provides a written acknowledgement (ACK) confirming:

1. Price Acceptance: Matches the PO price.
2. Date Confirmation: Verifies the delivery schedule.

• Rule: If an ACK is not received within 48 hours, the buyer must escalate. Unacknowledged orders are invisible to the planning engine.

2.3.3 Purchase Price Variance (PPV) 

Any deviation between the "Standard Cost" (ERP baseline) and "Actual Cost" (PO Price) requires authorization.

• Negative PPV (Savings): Recorded for margin analysis.
• Positive PPV (Cost Increase): Requires Customer or Management approval before PO issuance if it exceeds the defined threshold (e.g., >5% or >$500 total).

Final Checklist