In order for any business to exploit its efficiency, it needs to have some system in place for placing purchase orders. These are the official orders that will help to set out the contractual relationship between the business and the supplier. So if the business wants 10,000 widgets on a certain date, then this needs to be formally set out within the purchase order, so that the supplier is fully aware of what is being asked of them and they do not have any excuse for non delivery.

Various templates are on offer via the internet, but sometimes people want to set up their own purchase order template, so that they really can personalise the template to the needs of their business. But there are some essential items that need to be included and here is a synopsis of the top 10 key points that you need to include:

Although it may sound basic you will need to ensure that the template clearly states that the purchase order is being issued by your company; in other words it has to include the name of the purchaser and the business address that you use.

However the template should also have a section that specifies the delivery address for the services or items. Although you may be a small company, there may well be times when the delivery address will be different from the standard address.

The template should have a space in which the name of the purchaser is clearly specified. This ensures that the contractual relationship between the supplier and the purchaser is set out and will not be subject to confusion.

The template also needs to have a section that indicates where the invoice should be sent; this is referred to as the invoice address. This is a good way of keeping suppliers aware of where they are delivering items to and where they need to send an invoice. Often the invoice address can be an email address.

Include a section that will specify the price that has been agreed. Again this ensures that there is no room for confusion; remember the clearer the purchase order is the less there can be errors in terms of the supply chain.

Another important section is the quantity you want. Again this needs to be clearly specified so that everyone is aware of what is expected; what you expect and what the supplier should deliver.

The delivery date or when goods are expected to be delivered needs to be outlined and this will require a specific section on the template.

However this is not the end of the story, you will need to include the terms of delivery. For example sometimes goods may need to be delivered refrigerated or in batches of 20 and so on, so any specific terms of the delivery has to be spelled out.

The penultimate section should be the terms of your payment ie how you will pay. Will you pay in a certain period of time or will you pay immediately etc. This means that the supplier will not be able to quibble your payment methods after you receive an invoice.

Finally the 10th key point to include in your template is any specific issues that affect your business. Some businesses include an optimum supply point, giving notice of when more supplies will be required. Other businesses include quite detailed specification about quality and any guarantees, so for example your business will not be landed with a whole set of inferior goods. So no matter what else you include in the specific section, make sure that you have included at lest something about quality and how you can return sub-standard supplies. Hopefully you will not need to use this section, but it is always better to be safe, rather than sorry!

What Is Demand Planning?

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Demand planning is to some extent exactly what it says; it is a system, which often forms part of wider sales and operational planning process (SIOP process)), that is used to draft relatively accurate forecasts as to the demand that will exist for a company’s product or services.  It uses software to ensure that the information is all up to date and that all relevant data can be accessed.

The forecast in its most basic form is generally based on a number of key criteria, such as the contracts that exist, the sales orders that are plans, any proposed demands that may arise from future events and also threats that may interrupt demand.  However it can be much more detailed than this and a very in depth analysis of the likely demand can be carried out if that is what the business needs.  So it is a flexible system that can be adapted to the different needs of businesses.

Demand planning, when it is at its most detailed, is often described as being a blend of both technology and a business process because fundamental to demand planning is that it provides a methodology that will clearly identify the needs of the customer (the end user) and it provides a framework of stakeholders who will be responsible for carrying out all the planning required to meet the needs of the customer and to manage their expectations.

The methodology is a 5 step process and although there are different types of demand planning, the fundamentals are the same.  The customer is the key focal point of demand planning, but the customer could be in retail, in government or a public sector agency.  The important part is looking at what the customer will need, then how this can be provided and any threats that may exist to the process of meeting the likely demand.

The forecast is often referred to as a B2B application because it is usually shared with suppliers.  Whereas traditionally this type of information would have been viewed as too sensitive to be shared with suppliers, now it is common practice to share the information with suppliers.

This is simply because the suppliers need to be aware of what demand is likely to be, then they can ensure that they meet this need, without any interruptions or hiccups within the supply chain.  For this reason, demand planning is seen as an integral part of supply chain management and if done properly, when forecasts are accurate, it can ensure that the supply chain is stable and flexible enough to meet demand.

Demand planning is thus a way of helping to stabilise the supply chain and stability is the backbone for any good supply chain.

Opponents of demand planning (of which it has to be said, there are a few, but not many) specify that it is not possible to forecast what will happen in the future. However this ignores the very concrete fact that at least some planning has to go into meeting demand, otherwise the supply chain will simply be unable to meet huge rises in demand and then the whole supply chain looks to be in jeopardy.  So some planning is always required.

For demand planning to be effective it does need to be backed by management, since there are implications throughout all supply chain teams and all suppliers need to be aware of all the forecasts and the implications for them.  This means that the supplier will not be able to plead ignorance if they cannot meet demand at some point in the future and the forecast clearly indicated that demand was likely to be high at that point.

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