Purchase order management is the process of raising, approving, sending, tracking and closing the orders you place with suppliers. For eCommerce inventory, it runs from a reorder trigger to stock that is received, checked, put away and available to sell, with every short, excess or damaged delivery resolved against the PO.
- The purchase order process has eight stages, from a reorder trigger to closing the PO once stock is available to sell, and each stage changes the PO's status.
- Raise POs when the inventory position (on hand plus on order) falls to the reorder point, not on-hand stock alone, so the same stock is never ordered twice.
- An advance shipping notice lets the warehouse plan the dock and flags a short shipment before the truck arrives.
- Stock should rise by the counted, accepted quantity, never by what the supplier's paperwork says. Ministry of Nuts cut inwarding time by 50% on EasyEcom.
- Agree the rules for short, excess, damaged and wrong deliveries in your supplier terms before the first delivery.
- Track every open PO by status and measure suppliers on on time in full, actual versus quoted lead time, PO fill rate and receipt to sellable.
SECTION 01Purchase order management in one paragraph
In brief: Purchase order management is the process of raising, approving, sending, tracking and closing the orders you place with suppliers. For eCommerce inventory, it runs from a reorder trigger to stock that is received, checked, put away and available to sell, with every short, excess or damaged delivery resolved against the PO.
A purchase order (PO) is the buyer's official request to a supplier: these SKUs, in these quantities, at these prices, delivered here by this date. Once the supplier accepts it, it becomes the reference everything else is checked against: the shipment notice, the count at the dock, the supplier invoice.
Good PO management keeps buyers, the warehouse and finance working from the same record: what is on order, what to check it against and what should be billed. Note that quick-commerce and wholesale customers also send brands "POs"; those are sales orders to you. This guide is about the purchase orders you raise to your own suppliers.
SECTION 02The PO lifecycle, stage by stage
In brief: The purchase order process has eight stages: a reorder trigger, raising the PO, approving and sending it, supplier confirmation, the advance shipping notice (ASN), receiving and the goods received note (GRN), quality check and putaway, and closing the PO once stock is available to sell. Each stage changes the PO's status.
Reorder trigger → PO raised → Approved and sent → Supplier confirms → ASN → Receipt and GRN → QC and putaway → Available to sell
- Reorder trigger. A SKU's inventory position falls to its reorder point, a forecast calls for a pre-build, or a new launch needs opening stock.
- Raise the PO. The buyer sets the quantity, cost, delivery location and requested date.
- Approve and send. The PO is approved against budget or authority limits and sent to the supplier.
- Supplier confirms. The supplier accepts, or proposes changes to quantity, price or date. Changes are recorded on the PO, not in an email thread.
- ASN. Before dispatch, the supplier sends an advance shipping notice listing what is on the truck, so the warehouse can plan the dock.
- Receive and record the GRN. The warehouse counts and checks the delivery against the PO and records a goods received note.
- QC and putaway. Units that pass quality check go to bins; failed units are held aside for return or claim.
- Available to sell, then close. Stock goes live on every channel. The PO closes once all lines are received, or the balance is cancelled.
SECTION 03Raising POs from reorder points
In brief: Purchase orders drive inventory replenishment: when a SKU's inventory position (on hand plus on order) falls to its reorder point, a PO is raised for the planned order quantity. Using inventory position rather than on-hand stock prevents a second PO being raised for stock that is already on its way.
Inventory position = on hand + on order (open POs) − backorders and allocated stock
Reorder point = average daily sales × lead time in days + safety stock
Raise a PO when inventory position ≤ reorder point
Worked example. A SKU sells 40 units a day and the supplier's lead time is 10 days. With safety stock of 63 units, the reorder point is 40 × 10 + 63 = 463. The economic order quantity for this SKU is 662 units, and the supplier ships in cases of 24, so the buyer rounds up to 672 (28 cases).
At Monday close the SKU has 480 units on hand and nothing on order. By Tuesday close it is at 440, below 463, so a PO for 672 goes out. At Wednesday close, on-hand stock is 400, below the reorder point again, but the inventory position is 400 + 672 = 1,072, so no second PO is raised. That one check is what stops a buyer, or a system, from ordering the same stock twice.
Pre-builds and launches start from the forecast instead, and some suppliers run replenishment themselves under vendor managed inventory. The lifecycle after that is the same.
SECTION 04ASNs and inbound scheduling
In brief: An advance shipping notice (ASN) is the supplier's message, sent before or at dispatch, listing exactly what is in a shipment: PO number, SKUs, quantities, cartons, batch or expiry details and expected arrival. It lets the warehouse schedule a dock slot and staff, and flags any shortfall against the PO before the truck arrives.
Without an ASN, the warehouse finds out what was shipped when it opens the cartons. With one, short shipments show up early, while the buyer can still chase the balance or move stock between locations.
Ask suppliers to quote your PO number and SKU codes on every ASN, carton label and invoice, so deliveries do not sit on the dock unmatched. For larger suppliers, book inbound slots so deliveries do not all land on the same morning.
SECTION 05Receiving against the PO
In brief: Receiving against the PO means counting and checking each delivery line by line against the open purchase order, then recording what was actually accepted. Stock should rise by the counted, accepted quantity, never by what the supplier's paperwork says. The PO line then moves to partly received or fully received.
Good receiving is scan-based: the receiver opens the PO, scans each unit or carton, and counts are compared with the order in real time, with batch, expiry and cost captured where they apply. Our guide to the goods received note covers the document itself and how it supports the three-way match between PO, GRN and supplier invoice.
The time from the truck arriving to stock being sellable matters as much as the count. Every hour a carton sits unreceived is an hour that SKU can show as out of stock online. Ministry of Nuts cut the time it spends on inwarding by 50% on EasyEcom.
SECTION 06Short, excess and damaged deliveries
In brief: To handle short or excess deliveries against a PO, receive only what was counted and accepted, record the difference on the PO line, and follow an agreed rule: keep the PO open for a short balance or close it, accept an excess only within an agreed tolerance, and hold damaged units for return or claim.
| Exception | On the dock | On the PO | On inventory |
|---|---|---|---|
| Short delivery | Receive what arrived; note the shortfall on the GRN | Leave the balance open if it is coming, or cancel it | Stock rises by the received quantity only |
| Excess delivery | Accept up to the agreed tolerance; set aside the rest | Amend the PO for accepted extras, with approval | Only accepted units are added |
| Damaged or failed QC | Photograph, quarantine and record the reason | Raise a return or claim against the line | Held as non-sellable, never added to available stock |
| Wrong item | Do not receive into the PO line; set aside | Flag to the supplier for exchange | Not added |
| Late delivery | Receive as normal | Record actual versus promised date | Check whether customer promises need updating |
Write these rules into your supplier terms before the first delivery, including the excess tolerance, how long a short balance stays open and when a PO expires. Otherwise every exception becomes a negotiation on the dock.
SECTION 07Tracking open purchase orders
In brief: Purchase order tracking means knowing the status of every open PO (draft, approved, sent, confirmed, in transit, partly received, received, closed or cancelled) and measuring suppliers against it: on time and in full, actual versus quoted lead time, and time from receipt to sellable stock.
- On time, in full: the share of PO lines delivered complete by the promised date.
- Lead time, actual versus quoted: if a supplier quotes 10 days and delivers in 14, your reorder point is four days short.
- PO fill rate: units received divided by units ordered.
- Receipt to sellable: hours from truck arrival to stock live on every channel.
Review open POs weekly alongside your inventory KPIs. Late POs for top sellers are the first sign of a stockout coming.
SECTION 08Purchase order fields checklist
In brief: A purchase order should include a PO number, order and required-by dates, supplier and ship-to details, a line for each SKU with your code and the supplier's code, quantity, unit of measure and case pack, unit cost and tax, payment and delivery terms, labeling instructions and an authorized approval.
| Section | Fields |
|---|---|
| Header | PO number, order date, required-by date, buyer, approval |
| Parties | Supplier name and ID, bill-to entity, ship-to warehouse address |
| Lines | Your SKU, supplier's code, description, quantity, unit of measure, case pack |
| Price | Unit cost, discounts, taxes, line total, currency |
| Terms | Payment terms, delivery terms, excess tolerance, expiry date of the PO |
| Inbound instructions | ASN required, carton labels with PO number and SKU, batch, expiry and MRP where applicable |
SECTION 09Where EasyEcom fits
In brief: EasyEcom manages purchase orders and receiving in the same system as your stock and orders: approved POs can be edited, delivered over several shipments and blocked from receipt once expired, and goods are received by scan with batch and expiry captured, so stock goes live on every channel as soon as it is put away.
In EasyEcom, teams can edit an approved PO without recreating it, receive a PO across several shipments and stop receipts against expired POs, with each supplier's terms held in the Vendor Master. In the warehouse management system, goods are received by QR or box-level scan on web or Android, with batch and expiry captured at the dock and quality check and putaway in the same flow. Received cost and MRP flow into the full inventory report, and stock updates the shared pool behind the order management system.
Want your POs, receiving and sellable stock on one record? Book a demo.
Frequently asked questions
What is purchase order management?
Purchase order management is the process of raising, approving, sending, tracking and closing the orders a business places with its suppliers. For eCommerce brands, it covers the full path from a reorder trigger to stock that has been received, checked and made available to sell, including resolving any delivery that does not match.
What are the steps in the purchase order process?
The steps are: a reorder trigger, raising the PO, approving and sending it, supplier confirmation, the advance shipping notice, receiving the goods and recording a goods received note, quality check and putaway, and closing the PO once stock is available to sell or the balance is cancelled.
How do purchase orders connect to inventory replenishment?
Purchase orders are how replenishment happens. When a SKU's inventory position, on-hand stock plus stock already on order, falls to its reorder point, a PO is raised for the planned quantity. Counting open POs in the inventory position stops the same stock being ordered twice.
How do you handle short or excess deliveries against a PO?
Receive only what was counted and accepted, and record the difference on the PO line. Keep the PO open for a short balance that is still coming, or cancel it. Accept excess only within a tolerance agreed with the supplier in advance, and hold damaged units for return or claim.
What should a purchase order include?
A purchase order should include a PO number, order and required-by dates, supplier and ship-to details, each SKU with your code and the supplier's code, quantity, unit of measure and case pack, unit cost and tax, payment and delivery terms, labeling instructions and an authorized approval.
What is an advance shipping notice (ASN)?
An advance shipping notice is a message a supplier sends before or at dispatch listing what is in a shipment: PO number, SKUs, quantities, cartons, batch or expiry details and expected arrival. It lets the warehouse plan the dock and spot short shipments before the truck arrives.