It's an "order" to purchase materials or services....
You are in the cake biz...you fax over a purchase order or "PO" as most people call them to your flour vendor. It shows how much flour you want, the agreed upon price and delivery terms.
If you don't receive your order, you can then call back the flour vendor and say "Where is my PO# 304?"
It is a way or tracking puchasing, and a written confirmation of your order. You can call any printing company and they can make them up for you.