What Is a Planned Purchase Order?
A planned purchase order (PPO) is a type of purchase order created without a confirmed delivery date. It records your intention to buy certain items or services in the future, giving suppliers advance notice so they can prepare.
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Unlike a standard purchase order, which specifies what you need and when you need it, a planned purchase order outlines only the items and quantities. Once your business confirms the requirement, the actual delivery schedule is arranged later.
This flexibility makes planned purchase orders a valuable tool for procurement teams managing large, seasonal, or long-term purchasing needs.
How a Planned Purchase Order Works
Here’s how a planned PO typically functions:
- You raise the order – listing items, quantities, and estimated timelines.
- The supplier reviews it – they can plan stock, production, or allocation.
- Delivery is scheduled later – when you’re ready to receive the goods.
- The order is confirmed – the planned PO may convert into a scheduled PO with exact dates.
This system benefits both buyer and supplier by improving visibility while maintaining flexibility.
When to Use a Planned Purchase Order
Planned purchase orders are especially useful when:
- Ordering in bulk – e.g., raw materials for manufacturing.
- Seasonal demand – such as retail stock ahead of holiday periods.
- Long-term supplier agreements – where you know you’ll need items regularly.
- Uncertain delivery timelines – when requirements are clear, but exact dates aren’t.
For example, a construction company may know it will need 10,000 bricks during a project but can’t fix the delivery date until site work progresses. A planned purchase order ensures the supplier is ready without overcommitting on delivery.
Benefits of Planned Purchase Orders
Planned purchase orders bring several advantages:
- Supplier preparedness – vendors can plan production or stock allocation.
- Flexibility – you control delivery timing without risking supply delays.
- Better supplier relationships – early visibility builds trust and cooperation.
- Cash flow management – payments are triggered only when deliveries occur.
- Potential cost savings – bulk commitments often lead to better pricing.
Planned vs Standard Purchase Orders
| Feature | Planned Purchase Order | Standard Purchase Order |
|---|---|---|
| Delivery Date | Not fixed upfront | Fixed at creation |
| Flexibility | High – dates added later | Low – delivery committed |
| Best Use Case | Bulk, recurring, or seasonal needs | One-off, immediate needs |
| Supplier Visibility | Strong | Limited |
Why Planned Purchase Orders Matter
Businesses often face fluctuating demand and uncertain timelines. Planned POs help bridge this gap by ensuring suppliers have visibility of future needs while leaving flexibility for delivery.
For finance teams, they also provide early insight into future commitments, supporting better budgeting and cash flow planning.
If your organisation raises frequent or high-value purchase orders, adopting purchase order software can streamline the process. Software makes creating, managing, and tracking planned POs easier while keeping finance, operations, and procurement teams aligned.
Final Thoughts
A planned purchase order is a simple but powerful tool for managing procurement. It allows businesses to signal intent, support supplier readiness, and maintain flexibility over delivery schedules.
By combining planned POs with automation, organisations can strengthen supplier relationships, avoid shortages, and gain greater control over their purchasing process.
