Purchase Order (PO)

Purchase Order Fundamentals

A Purchase Order (PO) is a vital document used in the purchasing process between Amazon and its vendors. It serves as an official request from Amazon to vendors for the delivery of specified products, detailing quantities, delivery dates, costs, and other critical transaction information. In the Amazon Vendor Central ecosystem, POs act as the foundation for all vendor supply chain operations.

Key characteristics of Amazon purchase orders include:

• Formal Documentation: POs provide legal and operational clarity for both parties
• Detailed Specifications: Include product quantities, delivery windows, and pricing information
• Catalog Integration: Rely on accurate catalog attributes to minimize order errors
• Bulk Processing: Can be managed efficiently through Excel spreadsheets and bulk operations
• Pick List Generation: Provide detailed breakdowns for shipment preparation

Purchase Order Confirmation

Confirmation Process

When Amazon generates a purchase order, vendors receive notification emails and are strongly encouraged to confirm or reject POs within 24 hours of receipt. This rapid response is crucial for several reasons:

• Delivery Promises: Low confirmation rates directly impact Amazon’s ability to make accurate delivery promises to customers
• Future Orders: Poor confirmation performance can negatively affect future order allocation
• Inventory Management: Quick confirmation enables Amazon to maintain optimal inventory levels

Confirmation vs. Rejection

Confirming a PO means the vendor agrees to deliver the specified products within the designated shipping window. Vendors must be confident in their ability to fulfill the order as confirmed, as failure to deliver may result in cancellations and chargebacks.

Rejecting a PO should be done using appropriate acknowledgment codes when vendors cannot fulfill the order. These codes serve important functions:

• Help Amazon make informed future purchasing decisions
• Ensure accurate communication between vendors and Amazon
• Aid in efficient inventory management and planning
• Prevent unnecessary chargebacks and penalties

Purchase Order Management

Update Flexibility

Vendors can modify confirmed purchase orders within specific timeframes to accommodate changing business circumstances:

• Timing Windows: Updates are permitted up to two days post-issuance or 14 days before the Advance Shipment Notification (ASN) ship date
• Modifiable Elements: Vendors can adjust product availability, delivery dates, expected quantities, or unit costs within these windows
• Backorder Management: When applicable, backorders must be confirmed with adjusted expected ship dates, ensuring restock occurs within 30 days to maintain visibility on Amazon

Order Status Management

Overdue and Canceled POs: Purchase orders that are past due automatically appear under ‘Items pending cancellation.’ Vendors should:

• Await system reconciliation if discrepancies occur
• Avoid shipping without valid POs to prevent chargebacks
• Monitor order status regularly to maintain compliance

Bulk Management: POs can be efficiently processed through:

• Excel spreadsheet uploads and downloads
• Bulk confirmation and rejection operations
• Automated status updates and reporting

Purchase Order Fulfillment

Matching and Compliance

Purchase Order Fulfillment involves precise matching of products, quantities, and shipment details at every stage to prevent shortage claims and maintain operational efficiency:

Critical Matching Requirements:

• Products shipped must exactly match those specified in the confirmed PO
• Quantities must align with acknowledged amounts in the purchase order
• Shipment details must correspond with ASN information

Compliance Best Practices:

• Update purchase order details promptly when inaccuracies are discovered
• Avoid shipping canceled orders under any circumstances
• Ensure proper item preparation according to Amazon’s requirements
• Adhere strictly to specified delivery windows

Preventing Shortage Claims

Discrepancies between purchase orders and advance shipment notifications (ASN) can lead to:

• Unmatchable records in Amazon’s systems
• Automatic generation of shortage claims
• Financial penalties and chargebacks
• Negative impact on vendor performance metrics

Purchase Order Outages

Definition and Scope

Purchase Order Outages refer to periods when vendors cannot confirm or fulfill Amazon orders due to business closures. These typically occur during:

• National holidays
• Planned business closures
• Unplanned events (emergencies, system failures, etc.)

Outage Reporting Requirements

Advance Notification: Vendors should provide outage information through Vendor Central settings:

• Planned Outages: Report at least 30 days before scheduled closures
• Unplanned Events: Update the system as soon as possible when events occur

Reporting Criteria: An outage should only be reported when:

• The business is completely inaccessible for order fulfillment
• No partial fulfillment capabilities exist
• The closure affects the vendor’s ability to process any orders

System Impact and Handling

Automated Processing: Amazon’s system automatically:

• Categorizes national holidays as outages
• Extends delivery windows to accommodate outage periods
• Pauses regular replenishment orders during reported outages

Order Management During Outages:

• Regular replenishment orders are suspended
• Special program orders may still be generated and require handling
• Fulfillment adjustments may be necessary for orders placed during outage windows
• Order confirmation can resume on business reopening days

Post-Outage Operations: Upon resuming business operations, vendors should:

• Confirm any pending orders that accumulated during the outage
• Update delivery dates for orders affected by the closure
• Review and adjust inventory availability as needed

Best Practices for Purchase Order Success

1. Rapid Response: Confirm or reject all POs within 24 hours
2. Accurate Catalog Management: Maintain precise product information to reduce order errors
3. Proactive Communication: Report outages and issues promptly
4. System Integration: Utilize bulk management tools for efficiency
5. Compliance Monitoring: Regularly review performance metrics and address issues quickly
6. Documentation: Maintain detailed records of all PO transactions and communications

Efficient purchase order management is critical for vendors to maintain strong business relationships with Amazon and ensure seamless product supply flows. Understanding and implementing proper PO processes safeguards operations, prevents financial penalties, and supports long-term vendor success on the platform.