Understanding Purchase Order Revisions: What They Are and How to Manage Them

Identify the Need for a Change

Sometimes it is well known when a purchase contract needs to be revised, such as when there are additional features that require more labor, material, and overhead.  Other times, purchase order changes are not foreseen.  For example, the supplier discovers something during manufacturing that was not accounted for in the engineering drawing and results in added scope or rework.  In either case, this additional cost may also require changes to the scheduled delivery date.

Other instances may be due to changes in demand that necessitate updates to delivery dates and quantities.  These instances are relatively minor and are typically much more straightforward to resolve and execute.

Request a Purchase Order Revision

A purchase order change request can be initiated by either the buyer or supplier.  The buyer may need to revise the schedule, quantity, or scope of the project for a multitude of reasons.  Likewise, the supplier may discover things during manufacturing that were not included or may be incorrect on the engineering drawing and need to be corrected.  Another reason may simply be that the supplier finished the goods earlier and is requesting delivery of the goods to the buyer early.  Whether the buyer accepts in this scenario largely depends on where their inventory position stands.  If they already have enough parts on hand, they may reject the request to keep their operation running lean.

The request may be made via email, phone call, or, depending on the procurement software platform, the PO change request can be submitted directly through the platform for the other party to review and approve.  The Lasso purchase order software provides the ability for either the buyer or supplier to submit a purchase order change request and upon approval will automatically update the purchase order and send the revised purchase order to the counter party to sign.

Get Internal Approvals

The exact timing of this step and the necessity will vary based on each organization’s procurement policies.  For example, on many occasions, schedule changes and small quantity changes do not require any approvals.  In other cases, especially when the dollar value is changing significantly, multiple approvals may be needed as part of the process.  These may be given during the change request process or once the purchase order has been revised and routed to the approvers queue.

Update and Send the Purchase Order

It is best practice to write out the change to be clear and visible with the following information:

• Editing the original document directly or creating a new version with a clear label (e.g., “PO #4567 Rev. 1”).
• Highlighting the changes (e.g., “Quantity increased from 50 to 75 units”). If you use procurement software like Lasso, the updates can be electronically logged for easy organization, access, and analytics.

In some procurement systems, the purchase order can be automatically updated from the change request submitted through the platform.  In others, a buyer must contact the supplier, agree to the updates, and then manually go in and revise the purchase order.