What is pre-agreed order and how does it work? Learn more in this article.

Over the course of 2020, we saw the introduction of the electronic order NSO, a procedure that, for the moment, is only mandatory for entities of the National Health Service. The electronic order, which we have already discussed previously, allows for a greater level of automation, efficiency, and transparency in the processes of ordering goods and services, especially in public administrations and related public procurement processes.

Electronic orders must pass through the NSO platform – Nodo Smistamento Ordini (order sorting node), developed by the Italian General Accounting Office. Through the NSO, electronic orders are checked, validated, and then transmitted to the designated recipient, customer, or supplier. The NSO electronic order is structured according to the UBL PEPPOL standard, and as a result, it has a high degree of interoperability.

As we will see, the procedure that constitutes the electronic order makes it possible to set up a fully documented and traceable procurement process, since it maintains a record of all possible changes, corrections, and errors that are made during the ordering process.

This is why the electronic ordering process is able to ensure a high level of transparency. Moreover, since January 1 of this year, the obligation to include the so-called identification triplet, which contains the data of the electronic order of reference, in the electronic invoice has now come into force. In this way, through the immediate and singular link between order and invoice, an even higher level of automation and overall integration of the entire procurement process is achieved, which brings greater efficiency to the process as a whole.


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Electronic order: Not one, but many processes

In reality, when we talk about “NSO electronic order,” we are not referring to a single type of process, but to several processes. The electronic order, as it has been conceived and structured, can be made through three distinct types of processes, each with its own characteristics. These are:

  • Simple electronic order: the process that we could define as basic, where only one type of document (the order) is used and sent by the Customer to the Supplier.
  • Complete electronic order: a process that foresees the use of more than one document, i.e. the order, response, and feedback of the order. The complete order includes the direct order flow from the customer administration to the supplier as well as the response flow from the supplier to the customer and, eventually, a subsequent matching order (again, from the customer to the supplier). The matching order confirms, modifies, or replaces the proposal contained in the supplier’s response.
  • Pre-agreed electronic order: in this process there are two types of documents, the pre-agreed order and the matching order. In this scenario, the supplier initiates the flow, sending a pre-arranged order to the customer’s administration based on a previously established agreement, to which the administration will respond with a feedback order.

From the data made available by the State Accounting Office, which manages and monitors all processes, the most widely used type of electronic order is currently the simple order. However, we hope that the other two options provided by the system, the complete order and the pre-agreed order, will also become more popular.

In fact, since these processes cover a wider and more comprehensive range of customer-supplier interactions, they allow a greater level of automation and standardization, thus reducing the burden of internal processes for companies and government agencies.

Let’s look at how the pre-agreed order works and the benefits it can bring to the ordering processes.


The pre-agreed electronic order

As we pointed out in the previous paragraph, the pre-agreed order inverts the route of the order process. Here, it’s no longer the customer who addresses an order to the supplier, but the contrary. That is to say, it is the supplier who provides the input that begins the purchasing cycle, sending the order or order proposal, to its customer. This is possible because of the previous supplier agreements between supplier and customer that contain the characteristics and requirements of the customer. Once the pre-agreed order has been received, the client can view it and use the matching order to respond to their supplier in one of the following ways:

  • Confirm the order if it is correct and conforms to the agreements made and the requirements of the entity
  • Reject the order if it does not comply with the established requirements
  • Replace the order when changes are proposed to the supplier regarding the order received, for example in reference to the quantities indicated or to certain commodities

Therefore, in such a scenario the client administration is limited to “controlling” the order received from the supplier and making changes only when strictly necessary.


Why choose the pre-agreed order?

It is generally said that by changing the order, the result does not change. In fact, in this case, that’s not really the case. Choosing the pre-agreed order option, reversing the order of the players involved regarding the other possible processes, can change the end result. Planning the orders upstream through predefined supply agreements can potentially lead to a series of cascading benefits, both for the client public administration and for the supplier company.


Benefits for the public administrations

First of all, stipulating a supplier agreement requires the administration customer to examine with timeliness of its own requirements, planning the necessary supplies through realistic time estimates. However, for specific needs or conditions that require adjustments, it is always possible to propose modifications to the supplier through a dedicated feedback process. In this way, while on the one hand prior agreements are not fixed, on the other hand, they provide a solid basis for a structured and rational supply plan. Such rational planning also means reducing waste, thus making the use of public resources more efficient and generating savings.

In addition, opting for the pre-agreed order means reducing the workload on the authority’s staff, since the process is transferred to the supplier company. The administration’s staff are only responsible for the less burdensome tasks of verification and making any changes, which take less time. In other words, the pre-agreed order is able to further streamline and automate the processes required to complete the order cycle.

Finally, by reducing the number of necessary operations to be carried out by the client’s administration, the possibility of errors in the creation of orders is also reduced and this speeds up the time to execute the order.


The benefits for suppliers

The prearranged order has benefits for supplier companies, especially for those in the public administration. In fact, pre-arranged agreements allow suppliers to be able to plan, prepare, manage, and deliver orders in advance. Consequently, the supplier will have ample time to consider orders in advance, which allows it to supply the necessary raw materials and the distribution of the workloads in a timely manner over the course of the year. In this way, it is possible to optimize both the resources employed and the internal processes of the company. The pre-agreed order also reduces the risk of errors in the compilation of the order by the customer’s administration staff.

In general, as we mentioned earlier, the combined use of the agreements for predefined supply and the pre-agreed order guarantees the traceability of all operations undertaken and the stipulated agreements. In this way, this guarantees maximum transparency of the process, which benefits both the supplier and the administration customer.


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