Typical Purchasing Scenarios and Practical End-to-End Exercises

How to Use These Scenarios

This chapter is a practice lab. You will work through five common purchasing variations and produce (or review) the same types of outputs you will face on the job: documents, approval routing decisions, and exception handling. Each scenario includes an end-to-end traceability task: you will follow one PO line from request through payment and answer checkpoint questions that test whether the transaction would successfully clear controls (matching, approvals, and evidence of receipt/service).

What You Will Deliver in Each Scenario

• Document pack: the minimum set of artifacts that must exist (even if they are system-generated).
• Approval path: who must approve and why (based on spend type, urgency, risk, and dollar thresholds).
• Issue prediction: where the process commonly breaks and what evidence resolves it.
• Traceability answers: checkpoints that prove you can follow a single line item through to payment.

Suggested Working Method (Repeat for Each Scenario)

1. Read the scenario and highlight: item/service, quantity, price, delivery location/date, and any special terms (freight, warranty, inspection, return rights).
2. List required documents and identify the “system of record” for each (procurement system, receiving system, AP system).
3. Map approvals: requester → budget owner → procurement → any special approvers (IT/security, facilities, EHS, capex committee).
4. Identify match points: what will be matched (PO vs receipt vs invoice) and what tolerances apply.
5. Run the traceability task and answer checkpoint questions.

Scenario 1: Catalog Office Supplies (Low Risk, High Volume)

Situation: A department needs standard office supplies (paper, pens, toner) from an approved catalog supplier. Delivery is to the main office within 2 business days. Spend is small but frequent.

Step-by-Step Practice

1. Create the requisition from catalog: select items, confirm unit of measure, and validate ship-to and cost center.
2. Check budget availability: confirm funds for the cost center and period.
3. Route for approval: typically the cost center owner (and possibly a delegated approver for low-value purchases).
4. Generate the PO: ensure catalog pricing and supplier terms populate correctly.
5. Confirm receipt: for office supplies, receipt may be “desktop receiving” or central receiving depending on policy.
6. Invoice handling: many organizations use consolidated invoices (weekly/monthly) for catalog suppliers.

Document Pack (Produce/Review)

• Catalog requisition (line-level details and accounting)
• Approval record (who approved, when, and under what authority)
• PO (or PO confirmation if supplier acknowledges electronically)
• Receipt confirmation (GRN or equivalent confirmation record)
• Supplier invoice (possibly consolidated)

Correct Approval Path (Decide)

• Primary approver: cost center/budget owner
• Procurement involvement: often minimal (catalog controls substitute for manual review)
• Common policy trigger: if a line exceeds a threshold (e.g., high-value toner order), it may require additional approval

Where Issues Arise (Predict)

• Wrong ship-to → goods delivered elsewhere; receipt not recorded; invoice cannot match.
• Catalog substitution/backorder → supplier ships different item/quantity; mismatch at invoice.
• Consolidated invoice complexity → multiple POs/receipts on one invoice; missing one receipt blocks the whole invoice if not split.

Traceability Task: Follow One PO Line

Choose one line: “A4 paper, 10 reams”. Trace it from requisition to payment and answer:

• Checkpoint 1: What document proves receipt? Identify the specific receipt confirmation/GRN (or desktop receiving record) tied to that PO line.
• Checkpoint 2: What triggers AP to release payment? Invoice matched to PO line and receipt confirmation within tolerance, plus invoice approval if required.
• Checkpoint 3: What exception would stop the match? Price variance (catalog price changed), quantity variance (short shipment), or missing receipt confirmation.

Scenario 2: Urgent Replacement Part with Expedited Freight (Time-Critical)

Situation: A production line is down. Maintenance needs a replacement motor controller today. Supplier can ship immediately with expedited freight. The part is not in catalog. Total cost includes part + freight surcharge.

Step-by-Step Practice

1. Create an urgent requisition: include part number, specifications, required delivery time, and justification (“line down”).
2. Confirm sourcing approach: use an approved supplier if possible; if not, document why (availability/time).
3. Capture freight correctly: decide whether freight is a separate PO line, a service line, or included in unit price (follow your policy).
4. Route for expedited approval: ensure emergency approvals still comply with authority limits.
5. Issue PO quickly: include delivery instructions, required ship method, and any “no substitutions” note.
6. Receive and record: receiving evidence may include proof of delivery plus internal confirmation that the correct part arrived.
7. Invoice review: verify freight surcharge matches what was authorized.

Document Pack (Produce/Review)

• Urgent requisition with justification
• Supplier quote/confirmation (email is common in emergencies)
• PO including freight terms (Incoterms/ship method if used internally)
• Proof of delivery (carrier POD) and receipt record
• Invoice showing part and freight

Correct Approval Path (Decide)

• Primary approver: operations/maintenance budget owner
• Additional approver (common): plant manager or emergency approver due to urgency and premium freight
• Procurement review: confirm supplier legitimacy and pricing reasonableness (even if after-the-fact review is permitted)

Where Issues Arise (Predict)

• Freight not authorized → invoice includes expedited freight but PO does not; match fails.
• Part number mismatch → supplier ships a “compatible” item; receiving disputes; payment delayed.
• After-hours delivery → POD exists but receipt not posted; invoice stuck in “missing receipt”.

Traceability Task: Follow One PO Line

Choose one line: “Motor controller, qty 1” (and optionally the freight line). Answer:

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• Checkpoint 1: What document proves receipt? Carrier POD plus internal receipt posting tied to the PO line (or a receiving log if policy allows).
• Checkpoint 2: What triggers AP to release payment? Matched invoice to PO and receipt; freight line must also match authorization/tolerance.
• Checkpoint 3: What exception would stop the match? Freight billed but not on PO, price variance beyond tolerance, or receipt not posted despite POD.

Scenario 3: Recurring Services Under a Blanket PO (Cleaning / IT Support)

Situation: Facilities has a monthly cleaning service. IT has a monthly support retainer. Both are recurring services with predictable spend. A blanket PO (BPO) covers the year with monthly invoices.

Step-by-Step Practice

1. Set up the blanket PO structure: define service description, period of performance, not-to-exceed amount, and billing frequency.
2. Define how “receipt” is evidenced for services: e.g., monthly service acceptance, timesheets, ticket reports, or manager sign-off.
3. Establish invoice referencing rules: invoice must reference BPO number and service period (e.g., “Jan 1–31”).
4. Monthly cycle: (a) service delivered, (b) service acceptance recorded, (c) invoice received, (d) match/approval, (e) payment.
5. Monitor consumption: track remaining BPO balance and prevent overbilling.

Document Pack (Produce/Review)

• Blanket PO with not-to-exceed value and service period
• Service acceptance record (monthly sign-off, service entry sheet, or equivalent)
• Supplier invoice referencing period and BPO
• Any supporting evidence (cleaning checklist, IT ticket summary, SLA report)

Correct Approval Path (Decide)

• Initial BPO approval: budget owner + procurement (and possibly legal/vendor management if required for service terms)
• Monthly approval: service owner confirms performance (facilities manager / IT manager)
• Special approvers (common): IT/security for IT support; site EHS for certain facility services

Where Issues Arise (Predict)

• Missing service period on invoice → cannot confirm what month is billed; approval delayed.
• No service acceptance recorded → invoice cannot be approved/matched; payment held.
• BPO exhausted mid-year → invoices exceed remaining balance; requires change order or new BPO.
• Rate changes → supplier increases monthly fee; if BPO not updated, price variance triggers exception.

Traceability Task: Follow One BPO Line

Choose one line: “Monthly cleaning service – Building A”. Answer:

• Checkpoint 1: What document proves receipt? Service acceptance record for the billed month (sign-off/service entry sheet).
• Checkpoint 2: What triggers AP to release payment? Approved service acceptance + invoice referencing correct period and BPO, within remaining balance.
• Checkpoint 3: What exception would stop the match? Invoice billed for wrong period, missing acceptance, or invoice exceeds BPO remaining value.

Scenario 4: One-Time Capital Equipment Purchase with Inspection (High Value, High Control)

Situation: Engineering purchases a new packaging machine. It is a capital asset requiring formal inspection/acceptance before payment. Delivery includes installation and commissioning. Payment terms may include milestones (deposit, delivery, acceptance).

Step-by-Step Practice

1. Prepare the requisition with capex details: asset category, intended location, and required acceptance criteria (e.g., performance test).
2. Confirm approval routing: capex often requires additional approvals beyond normal spend authority (finance/capex committee).
3. Build the PO with milestones: separate lines for equipment, installation, training, and any commissioning services; define milestone payment triggers.
4. Plan receiving and inspection: define who inspects, what documents they complete, and what constitutes acceptance.
5. Record receipt vs acceptance: physical delivery may be recorded, but payment may be blocked until acceptance is documented.
6. Invoice processing by milestone: ensure invoices align to the correct milestone and that acceptance evidence exists.

Document Pack (Produce/Review)

• Capex requisition with business justification and asset coding
• Approval evidence (capex approvers, finance)
• PO with milestone schedule and acceptance criteria
• Delivery documentation (POD) and receiving record
• Inspection/acceptance report (commissioning sign-off, test results)
• Supplier invoices by milestone (deposit/delivery/acceptance)

Correct Approval Path (Decide)

• Primary approver: engineering/operations budget owner
• Mandatory additional approvers (common): finance/capex committee; sometimes risk, safety, or quality depending on equipment
• Procurement role: ensure PO terms reflect milestone controls and acceptance requirements

Where Issues Arise (Predict)

• Invoice arrives before acceptance → AP holds payment; supplier disputes; relationship strain.
• Milestones unclear → invoice cannot be tied to a PO line; manual intervention required.
• Partial delivery → receiving posted for some components; invoice billed for full system; quantity/value mismatch.
• Inspection documentation missing → acceptance cannot be proven; payment blocked even if equipment is installed.

Traceability Task: Follow One PO Line

Choose one line: “Packaging machine – base unit”. Answer:

• Checkpoint 1: What document proves receipt? Receiving record tied to delivery (often supported by POD), plus inspection/acceptance report if payment requires acceptance.
• Checkpoint 2: What triggers AP to release payment? Milestone condition met (e.g., acceptance sign-off) and invoice matched to the correct PO milestone/line.
• Checkpoint 3: What exception would stop the match? Invoice billed for acceptance milestone without acceptance report, or billed amount exceeds milestone value/tolerance.

Scenario 5: Return and Credit Note After Damaged Delivery (Reverse Flow)

Situation: A shipment of goods arrives damaged. Receiving notes damage. The supplier agrees to a return and issues a credit note (or replacement shipment). AP must ensure the original invoice is not overpaid and that the credit is applied correctly.

Step-by-Step Practice

1. Document the damage at receipt: record condition, quantities affected, and photos if required.
2. Initiate return authorization: obtain supplier RMA/return reference and shipping instructions.
3. Record the return movement: ensure the system reflects goods returned (inventory/receiving adjustment).
4. Decide resolution path: credit note vs replacement shipment (or both: replacement plus freight credit).
5. AP handling: link credit note to the original invoice/PO line and ensure it offsets payment or creates a recoverable balance.

Document Pack (Produce/Review)

• Receiving discrepancy/damage report (with evidence)
• Supplier RMA/return authorization
• Return shipment documentation (carrier tracking, return receipt if applicable)
• Credit note (or replacement order confirmation)
• AP adjustment record showing how the credit is applied to the invoice/payment

Correct Approval Path (Decide)

• Return approval: receiving/warehouse + requester confirmation; procurement may approve supplier negotiation outcomes
• Credit note approval: AP validates linkage to original invoice and ensures correct accounting treatment
• Escalation trigger: repeated damage incidents may require supplier performance review

Where Issues Arise (Predict)

• Invoice paid before damage discovered → recovery process needed; credit must be tracked and applied later.
• Credit note not referenced correctly → credit sits unapplied; supplier statement shows open credit while books show overpayment.
• Return not recorded in system → inventory and receipt records disagree; matching and financials become inconsistent.
• Replacement shipped but original receipt not reversed → double quantity on hand; invoice/receipt confusion.

Traceability Task: Follow One PO Line

Choose one line: “Item X, qty 20” where 5 units were damaged. Answer:

• Checkpoint 1: What document proves receipt? Initial receipt record plus discrepancy/damage report indicating accepted vs rejected quantities.
• Checkpoint 2: What triggers AP to release payment? Only the accepted quantity should clear matching; payment is released when invoice aligns to accepted quantity/value (or after credit is applied).
• Checkpoint 3: What exception would stop the match? Invoice billed for full quantity when only partial quantity was accepted, or missing credit note/return record for rejected units.

End-to-End Traceability Drill (Cross-Scenario Worksheet)

Use this worksheet format to practice traceability consistently. Complete it once per scenario for one selected PO line.

Checkpoint Questions (Answer for Each Scenario)

• Evidence: Which single record is the strongest proof that the organization received the goods/services for this line?
• Trigger: What exact event changes the invoice from “held” to “eligible for payment”?
• Stopper: Name one realistic exception that would block matching for this line, and the document needed to clear it.
• Ownership: Who is the best owner to resolve the exception (requester, receiving, procurement, supplier, AP), and why?

Optional Challenge: Spot the Hidden Control Gaps

For each scenario, identify one control gap that could allow an incorrect payment and propose a practical mitigation.

• Catalog supplies: e.g., receipt not required → mitigate with periodic audit or spend analytics.
• Urgent part: e.g., after-the-fact approvals → mitigate with emergency approval log and threshold limits.
• Blanket PO services: e.g., weak service acceptance → mitigate with standardized monthly acceptance checklist.
• Capex equipment: e.g., unclear milestones → mitigate with explicit acceptance criteria and holdback line.
• Return/credit: e.g., unapplied credits → mitigate with credit aging report and mandatory invoice/credit linkage fields.