Demand forecast vs firm order: buyer checklist
Use a forecast to share expected demand, with an agreed statement that it gives no permission to buy materials or start production. Issue a separate authorised release for committed quantities and dates, and agree unused-material costs before approving purchases. Cambridge China Bridge can help coordinate these records with factory staff.
Give the forecast a clear planning purpose
Label the forecast “non-binding demand forecast, for planning only”. Ask the factory to acknowledge in writing that it is not permission to purchase materials, reserve paid capacity or start production. Check the wording against your existing supply arrangements rather than assuming the label settles every question.
Show expected demand by product and specification revision, with an issue date and review date. Keep forecast quantities separate from released quantities. For the documents used when placing an order, see purchase orders, proformas and commercial invoices.
Agree when a forecast becomes a release
Agree a release procedure with the factory: who sends the instruction, how the factory confirms it and what details it contains. Include the product, specification revision, quantity, price, payment arrangements and delivery milestones. Define whether a release authorises material purchasing, production or both.
Distinguish the date you must issue the release from the production start, dispatch and required arrival dates. Ask what happens if you miss the release deadline: request a revised schedule rather than letting forecast quantities roll into production automatically. Use shipping lead-time planning for the wider delivery schedule.
Name the people who can authorise spending
Give the factory a written list of authorised buyers and their agreed spending limits. Separate permission to approve a sample or discuss a schedule from permission to commit money. Ask the factory to refer unclear instructions to the named buyer before acting.
Use a separate written approval for early material purchases. Identify the material, quantity, specification, spending ceiling and intended released orders. State whether the factory may buy extra to meet its material supplier’s MOQ, and require approval before exceeding the agreed scope. Keep the approval and factory acknowledgement together.
Agree what happens to unused materials
Before authorising purchases, record who pays for unused material, who owns it, where it is stored and how long storage is agreed. Cover storage charges, condition checks, shelf life where relevant, and permission to use it for later orders. Identify branded packaging and bespoke components separately from reusable stock.
Agree the process for reductions, cancellations and specification changes. Ask for a stock record and supporting purchase records before considering a charge. Record how returns, reuse, resale or supplier credits reduce the proposed cost, and who approves disposal. Do not leave the settlement method to a conversation after demand falls.
Reconcile changes before the next release
Maintain a shared record showing the current forecast, accepted releases, approved material purchases, work in progress and unused stock. When demand changes, ask the factory to confirm what can still be stopped and what has already been purchased or made. Record any agreed change against the affected release.
For repeat buying, use managing a long-term Chinese supplier alongside this commitment record. Ask Cambridge China Bridge’s staff in China to check the factory’s material and production records against the approvals, then send any proposed extra commitment to your authorised buyer.
Frequently asked questions
How do I mark a forecast as non-binding?
Label it for planning only and ask the factory to acknowledge that it gives no permission to buy materials or start production. Check that this matches your existing supply arrangements.
What should a firm order release include?
Include the authorised buyer, product and specification revision, quantity, price, payment arrangements and delivery milestones. State what activity is authorised and obtain the factory’s confirmation.
Can I approve materials without ordering finished goods?
Agree a separate material approval covering quantity, specification, spending ceiling and unused-stock treatment. State that it authorises only the listed purchases, with production needing a separate release.
Who pays for unused materials if demand falls?
Agree that allocation before purchasing. Record ownership, storage, reuse and settlement arrangements. When a charge is proposed, request stock and purchase records and account for agreed credits or recoveries.