A preferred supplier is a supplier or group of suppliers that an organization has identified as its first choice for a particular product or service. This is typically based on the supplier's ability to meet the company's needs in terms of price, quality, delivery time, and other criteria.

A preferred supplier is usually selected after an evaluation process with the status typically granted for a specified period, often with the option to renew or extend the agreement.

Having a preferred supplier can offer several benefits for the company, such as cost savings through volume discounts or negotiated pricing, improved supply chain efficiency through better communication and collaboration, and reduced risk through a more stable and reliable supplier relationship. Equally, having preferred suppliers can streamline the procurement process through automation reducing administrative burden.

It is important for the organization to continuously monitor and evaluate the performance of its preferred suppliers to ensure that they continue to meet the organization's needs and expectations.

A purchase order (PO) is a commercial document issued by a buyer to a supplier, indicating the details of goods or services to be purchased. It is a formal offer to buy goods or services from a supplier and creates a legally binding contract between the buyer and the supplier once it is accepted.

A PO typically includes information such as the type and quantity of goods or services purchased, the agreed price, delivery dates, shipping and billing addresses, payment terms, and other relevant terms and conditions. It serves as a record of the agreement between the buyer and the supplier and helps to ensure that both parties understand their obligations.

The purchase order is often generated by the buyer's procurement department, based on a purchase requisition submitted by an internal department or employee. The purchase order is then sent to the supplier, who can use it as authorization to fulfill the order and ship the goods or provide the services. It is becoming more common for eProcurement systems automatically generate POs.

A purchase requisition (PR) is a formal request from an employee or department within an organization to purchase goods or services from an external supplier. The PR details the item or service to be purchased, the quantity required, the estimated cost, and any other relevant information the supplier may need to provide a quote or fulfill the request. A PR can be in physical and electronic form based upon an organization's procurement process and systems. The PR serves as an internal authorization to make the purchase following sign-off from an authorized budget holder and initiates the procurement process.

The PR is typically submitted to the organization's procurement or purchasing department, which is responsible for reviewing and approving the request. Procurement may review the requisition for accuracy, completeness, and compliance with the company's procurement policies and procedures. Once the requisition is approved, it is used to create a purchase order, which is sent to the supplier to initiate the purchase transaction. In the case of electronic PRs, many of these processes are automated.

PRs are an important tool for managing procurement and ensuring that purchases are made in a controlled and efficient manner. They help to ensure that the purchases are made within the spend management principles set by the organization.