A purchase commitment is a binding or planned obligation to buy a stated quantity or value under agreed conditions. It may appear in a contract, forecast, blanket order or capacity reservation.
| Area | What to record |
|---|---|
| Decision | State whether the commitment is firm, cancellable, forecast-only or subject to releases. Define the period, products, price basis and remedy for a shortfall. |
| Evidence | Track committed, ordered, received and remaining quantities, along with amendments and supplier capacity reserved against the commitment. |
| Watch point | An informal forecast should not be treated as a firm order. Ambiguity can leave the buyer holding excess stock or the supplier with unrecovered capacity. |
When the term matters
State whether the commitment is firm, cancellable, forecast-only or subject to releases. Define the period, products, price basis and remedy for a shortfall.
Checks before approval
Track committed, ordered, received and remaining quantities, along with amendments and supplier capacity reserved against the commitment.
An informal forecast should not be treated as a firm order. Ambiguity can leave the buyer holding excess stock or the supplier with unrecovered capacity.
