Definition
A purchase order is a formal request or instruction from a purchasing organization to a vendor or a plant to supply or provide a certain quantity of goods or services at or by a certain point in time.
Structure
A purchase order (PO) consists of a document header and a number of items.
The information shown in the header relates to the entire PO. For example, the terms of payment and the delivery terms are defined in the header.
A procurement type is defined for each of the document items. The following procurement types exist:
- Standard
- Subcontracting
- Consignment
- Stock transfer
- External service
Delivery of the total quantity of material (or performance of the total volume of services) specified in a purchase order item can be spread over a certain period in a delivery schedule, consisting of lines indicating the individual quantities with their corresponding planned delivery dates.
For PO items to be supplied by subcontractors, you can specify the necessary input materials or components that are to be provided to the subcontractor for assembly or processing in respect of each delivery date stipulated.
An item of the procurement type "external service" contains a set of service specifications. The latter can be hierarchically structured. The summary view of such a hierarchical structure is referred to as an outline. The outline comprises a number of levels, each representing a level of the service hierarchy. The order quantities are set out in service lines, representing individual jobs or activities. Value limits are specified instead of service lines for services or work that initially cannot be specified precisely.
If services covered by an already existing contract are released (ordered, or called off against the contract), the PO item can contain a value limit relating to the contract in question.
Conditions
Conditions can apply at various levels:
- To the entire purchase order
- At item level, to the material to be supplied or to the set of service specifications in the case of services
- At service line level for individual services (tasks or activities)
Account Assignment
Costs can be apportioned among various Controlling objects via the account assignment.
Vendor Confirmations
Vendors can issue confirmations to the relevant purchasing organization indicating their compliance or non-compliance with scheduled delivery dates.
PO History
The transactions following on from a purchase order are documented in the PO history on an item-specific basis.
Partner Roles
Instead of the vendor as the order recipient, other business partners can appear in various partner roles (e.g. goods supplier or invoicing party).
Plant
In the purchase order, each item is destined for a certain plant. Each plant belongs to a company code, to which the vendor’s (creditor’s) invoice is directed.
Texts
You can enter text in a purchase order directly or change texts that are suggested by the system. There are two kinds of text:
- Header text: applies to the entire document
- Item text: applies only to the relevant item
You define which texts appear in which order on printouts in Customizing for Purchasing. You can enter several header or item texts, which you can identify by your own codes.
See also:
Entering Text, Printing and Transmitting Documents as Messages
Release (Approval) Procedure
Purchase orders can be subject to a release (clearance, or approval) procedure.
Note on the term "release": In MM Purchasing, this term is used A) as a generic term covering various kinds of order document issued against outline agreements (these may be release orders issued against contracts or scheduling agreement releases, i.e. types of rolling delivery schedule issued against scheduling agreements, and B) (as here) in connection with an internal approval or expenditure authorization process for purchasing documents. In both cases, "releasing" can be regarded as equivalent to "giving the green light" to go ahead with a certain action (e.g. to the vendor to deliver a certain quantity of materials, or to Purchasing to create or issue a PO for items requested by a user department).
See also:
- Specifying Incoterms and Purchase Orders Shipping/...
- Incoterms and SAP Purchase Orders Shipping/Deliver...
- Units of Measure in SAP Purchase Orders
- Specifying Multiple SAP Purchase Orders Account As...
- Specifying Single Account Assignment SAP Purchase ...
- Account Assignment SAP Purchase Orders
- Creating a SAP Purchase Order With Zero Value
- Maintaining a Delivery Schedule for a SAP Purchase...
- Creating a SAP Purchase Order by Copying or Refere...
- Creating a SAP Purchase Order PO - Without a Maste...
- Creating a SAP Purchase Order - With a Master Reco...
- Creating a SAP Purchase Order Manually (Vendor Kno...
- Creating a Purchase Order using SAP
- SAP Purchase Orders Item Category
- What is Purchase Order in SAP?
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