How to Set Up Purchase Orders and Vendor Management in Odoo

Odoo's Purchase module manages the full procurement cycle: requesting quotes from vendors, creating purchase orders, receiving goods, matching vendor bills, and tracking vendor performance. Here's how to set it up.

Install and configure

• Go to Apps and install Purchase.
• Navigate to Purchase → Configuration → Settings.
• Enable Purchase Agreements if you use blanket orders or purchase tenders.
• Enable Purchase Approval if POs above a certain amount need manager approval.
• Set the approval threshold (e.g., orders over $5,000 require approval).

Set up vendors

• Create vendor contacts under Contacts with the "Company" type.
• On the vendor record, go to the Sales & Purchases tab.
• Set default payment terms (e.g., Net 30 Days).
• Set the default currency if the vendor invoices in a foreign currency.
• Add bank account details for payment processing.
• Optionally set a vendor reference — your account number with the vendor.

Link vendors to products

• Open a product and go to the Purchase tab.
• Add one or more vendors with their vendor price, minimum quantity, and delivery lead time.
• If a product has multiple vendors, set the preferred vendor first — Odoo uses this for automatic purchase order generation.
• The vendor's product code and description can be stored here — these appear on the PO sent to the vendor.

Create a purchase order

• Go to Purchase → Orders → Purchase Orders.
• Click New.
• Select the Vendor.
• Add products to the order lines. Odoo pulls the vendor price and lead time from the product configuration.
• Adjust quantities, prices, and delivery dates as needed.
• Click Send by Email to send the PO to the vendor as a PDF, or Confirm Order to confirm internally.
• Once confirmed, a receipt (incoming shipment) is created in Inventory.

Automated replenishment

Let Odoo create purchase orders automatically when stock runs low:

• On a product, go to the Inventory tab.
• Add a Reorder Rule (minimum inventory rule).
• Set the Minimum Quantity — when stock drops below this, Odoo triggers replenishment.
• Set the Maximum Quantity — Odoo orders enough to bring stock up to this level.
• Set the Route to "Buy" (purchase from vendor).
• Run the scheduler (Purchase → Run Scheduler) or let it run automatically to generate RFQs based on reorder rules.
• Review and confirm the auto-generated RFQs before sending to vendors.

Receiving goods

• When goods arrive, go to the PO and click Receive Products.
• Or go to Inventory → Operations → Receipts and process the receipt directly.
• Verify quantities received against the PO. You can receive partial quantities if the full order hasn't arrived.
• If using lot/serial tracking, assign lot or serial numbers during receiving.
• Validate the receipt to update inventory levels.

Vendor bills and three-way matching

• When the vendor invoice arrives, go to the PO and click Create Bill.
• Odoo pre-fills the bill from the PO — quantities, prices, and tax.
• Three-way matching compares: the PO (what you ordered), the receipt (what you received), and the vendor bill (what the vendor charged). Discrepancies are highlighted.
• Enable three-way matching under Purchase settings → "3-way matching."
• Bills with discrepancies are flagged and can require approval before payment.

Purchase agreements

• Blanket orders — Agree on pricing and terms with a vendor for a period. Create individual POs that draw down from the blanket order. Useful for recurring purchases where you've negotiated volume pricing.
• Purchase tenders — Send the same RFQ to multiple vendors and compare their responses in one view. Select the best offer per line item.

Reporting

• Purchase Analysis — Spending by vendor, product, date, and category.
• Vendor performance — On-time delivery rates and price adherence.
• Price history — Track how vendor prices have changed over time per product.

A well-configured purchasing workflow reduces manual ordering, catches billing errors, and gives you visibility into your supply chain. If you need help setting this up, talk to us.