What’s a Commercial Item?

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A commercial item is a product or service that can be purchased through a supply chain. Procurement managers evaluate items for cost-effectiveness and quality before placing an order with a vendor. The definition can also include items purchased for cash in a commercial enterprise.

A commercial item is any type of good or service that can be considered for purchase and ultimately ordered through the process of a supply chain. Items of this type are often priced in advance, using information provided by the manufacturer or retailer, and are then ordered by the customer. Typically, the payment process for a trade item involves issuing an invoice that provides payment terms, enabling the customer to take possession of the item and pay for it within those terms.

Evaluating one or more trade items for eventual purchase is an important part of the supply chain management process. Evaluation usually begins with the use of information provided in advance by sellers or other sources to help procurement managers and purchasing agents determine whether the item would actually provide an effective and cost-effective means of meeting a need or a current need. Part of the process will often involve comparing the commercial item’s features to similar products available through other sources and deciding if the item is the best possible purchase in terms of quality and price.

If the evaluation results determine that the commercial item is the best possible option, arrangements are made to place an order with the vendor or vendor. With most supply chain strategies, this typically requires the creation of a formal requisition which is routed to a purchasing agent, who in turn approves the order and assigns a purchase order number. At that point, the order can be placed with the supplier, with the specification that the PO number appears on the final invoice. Once the trade item has been received and accepted by the customer, the invoice is scheduled for payment, usually in accordance with both the company’s accounts payable procedures and taking into account the terms associated with the invoice.

Broadly speaking, a commercial item is any type of product or service offered for sale or trade, even items purchased for cash. Using this broad application, this means that products purchased in an office supply store for use in the commercial enterprise would also be considered a commercial item, since the customer has presumably compared the product with similar offerings, finding the quality and acceptable price, and decided to start buying. This broader definition is common in many areas of the world and is often used as a synonym for making any kind of sale of a good or service.




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