The process of managing purchase orders, also known as the purchase order flow process, was explained in the Purchase Order Management and Performance Measurement. This process was differentiated from the purchasing cycle by its lack of sourcing or price determination. The flow of purchase orders was traced from identifying requirements to closing them out.
To effectively and accurately manage purchase orders, several databases need to be created and maintained. These include static databases that are intentionally created or changed, and dynamic databases that are automatically updated whenever a purchase order is entered or altered. The timing of purchase order release was also discussed, with Material Requirements Planning (MRP), Reorder Point (ROP), and Kanban system being mentioned as options for order release. The Vendor Managed Inventory (VMI) process was also explored, with its major goals being to cut time and cost while allowing for flexibility in production and delivery.
VMI requires a strong sense of mutual trust, and a solid contract must exist between the two parties. The effect of the internet and computerized technologies on procurement and supplier relationship management (SRM) was also examined. The use of internet-enabled functions such as e-Procurement, e-Sourcing, and marketplace exchanges has enabled purchasing and SRM to take advantage of digital transformation opportunities. B2B marketplaces are also available for supplier relationship management services such as product search, supplier search, e-sourcing or strategic sourcing, and many other value-added services.