Glossary Term
Purchase Order (PO)
Definition
A Purchase Order (PO) is a formal document issued by a buyer to a seller that outlines the details of goods or services the buyer intends to purchase. The PO specifies the quantities, descriptions, prices, delivery dates, and terms and conditions of the transaction. Once accepted by the seller, the PO becomes a legally binding agreement. In the context of medical device manufacturing, POs are often used to order components, materials, or finished devices from suppliers, ensuring that both parties agree on the terms of the purchase.
Relevance to the MedTech Industry
A purchase order provides a clear and formal agreement between the buyer and the seller. It serves as an official request for products or services, ensuring that both parties understand the terms of the transaction, including the quantity, price, delivery date, and other conditions. For medical device companies, a PO is essential for ordering parts, equipment, or raw materials, helping manage inventory, track orders, and maintain control over procurement processes.
Additional Information & Related Terms
Related Terms
Purchase Agreement: A formal contract that outlines the terms and conditions of a purchase transaction between the buyer and seller.
Invoice: A document issued by the seller to request payment for goods or services delivered as outlined in the PO.
Procurement Process: The series of steps that companies follow to acquire goods or services, including issuing a PO, receiving goods, and processing payment.
Lead Time: The period between placing a PO and receiving the goods, critical for managing inventory and ensuring timely product availability.