At what stage is a Purchase Order (PO) created?

A Purchase Order (PO) is created during the stage when the planned purchase order is released. This is a critical step in the procurement process as it involves formalizing the request for goods or services to be supplied by a vendor.

At this stage, details regarding the items, quantities, prices, and delivery expectations are finalized and documented. The planned purchase order represents a draft or preliminary version of the PO, and releasing it transforms this draft into an official document that communicates commitment to the supplier. This release triggers the supplier to prepare for shipment or service provision based on the agreed terms.

Understanding this stage is crucial because it encapsulates the transition from internal planning to engaging an external supplier, signifying a binding agreement that facilitates the procurement cycle. This step is also essential for tracking and managing inventory levels, ensuring compliance with purchasing policies, and maintaining supplier relations.