The purchase order can be used for a variety of procurement purposes. Materials can be procured externally for direct consumption or for stock. It is also possible to procure services externally. Furthermore, the special procurement types “subcontracting”; “third party” (involving triangular business deals and direct-to-customer shipments) and “consignment” are possible.
Purchase orders can be used to cover the enterprise’s requirements using external sources (i.e. a vendor supplies a material or performs a service). A purchase order can also be used to procure a material that is needed in one of the enterprise’s physical plants from an internal source, i.e. from another plant. Such transactions involve longer-distance stock transfers. The activities following on from purchase orders (such as the receipt of goods and services) are logged, enabling an effective and efficient monitoring of the whole procurement process.
Purchase orders can be used for once-only procurement transactions. If, for example, it is wished to procure a certain material from a particular vendor only once, a purchase order is created. However, if the enterprise is thinking of entering into a longer-term supply relationships with this vendor, it is advisable to set up a so-called outline agreement, since this usually results in more favorable conditions of purchase.
In the interests of optimized purchasing, the purchase order quantity can be rounded in the course of purchase order processing to allow full advantage to be taken of negotiated conditions or for the optimal utilization of existing transport capacities.
Because not all materials or services to be procured justify the effort involved in individual monitoring, it is also possible to create a purchase order with an extended, predefined validity period and a value limit. (This may be done when procuring office supplies, for example). This type of purchase order is similar in nature to the “contract”.
In this case, it is not necessary to specify the individual materials or expend any effort with respect to goods receiving activities. In addition, employing automatic process can also help reduce the amount of work involved in invoice verification to a minimum.
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- Create Purchase Information Record-Materials Management Purchasing
- Materials Planning with SAP
- Logistics Invoice Verification in SAP MM PDF
- SAP Purchasing Management
- Tax On sales / Purchases Configuration Steps
- Materials Management with SAP ERP: Functionality and Technical Configuration PDF
- Customizing Materials Management Processes in SAP ERP
- User Exits and BAdIs in SAP MM (Materials Management)
- Purchase Requistion Manual Guide
- Integrating Materials Management with Financial Accounting in SAP
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