Purchase Order Processing

The following describes the elements of the purchase order and the process of creating a pur-chase order in SAP ERP.

3.1.4.1 Purchase Order

A purchase order is defined as a formal demand to a vendor for supplying particular goods or services under the negotiated conditions stated in the purchase order. In the purchase order you specify whether the material is delivered for stock or for direct consumption (e.g., cost center, asset or project). The goods receipt and invoice verification are usually carried out on the basis of the purchase order.

When creating a purchase order, this can take place either without reference or with refer-ence to a purchase requisition, a request for quotation or another document.

When entering order data, the ERP system suggests values for the particular fields:

- For instance, ordering address, terms of payment and freight (Incoterms) are suggested from the vendor master record.

- If a material master record for a particular material is maintained, the material short text or the material group is suggested amongst others.

- If a purchasing info record is already existent in the system, a default price is trans-ferred to the purchase order.

A purchase order is then either sent to a vendor or a stock transport order and is initiated in another plant of the company (see teaching unit 5). In case of a stock transport order, the re-sulting freight costs can be taken into account in the purchase order.

Figure 44: Purchase order

Purchase Order Processing

You have already learned that a purchase order can be created as reference to an already exist-ing purchase requisition, RFQ, or another purchase order. Referencexist-ing existexist-ing documents keeps data input work to a minimum, since you do not have to enter the same data (vendor, material, quantity, price, etc.) multiple times. Thus, already existing data is transferred (cop-ied) from the preceding document into the purchase order. However, purchase order can, of course, be created without reference to preceding documents.

In case you do not know the responsible or preferable vendor when creating a purchase order, you can use source determination. Then, the system suggests possible vendors using pre-defined sources (outline agreements, info records, source list entries, quota arrangements).

You can determine the current processing status for each purchase order item. For instance, you can determine whether goods receipts and invoice receipts are already completed. You can display subsequent documents (material and invoice documents) from the purchase order history screen to monitor order progression.

In the purchase order, you can determine if material is delivered to a plant or procured direct-ly for consumption (e.g., cost enter, asset, project; cf. consumable materials). Usualdirect-ly, the

purchase order is the reference record for goods receipt (your company receives the ordered material) and invoice verification (you receive the bill for the material from the vendor).

3.1.4.2 Purchase Order Format

Purchase orders, like other documents in the SAP system, consist of a document header and one or more items.

The document header carries information that is valid for the entire purchase order. These data include, e.g., document currency, the document date and the terms of payment.

The item part of the document contains data describing the materials or services ordered.

Here additional information (e.g., delivery schedules or item-based text) for each item is maintained.

Figure 45: Purchase order format

The two following figures display the purchase order transaction interface in the SAP ERP system. The first figure highlights the individual screens areas and explains a few important buttons.

You access the purchase order transaction with the transaction codes ME21N (create purchase order), ME22N (change purchase order) or ME23N (display purchase order). Thereby, it does not matter which of the three transaction codes you use to access the purchase order. You can switch between functions by choosing Create or Display/Change. By choosing the Other Pur-chase Order icon, you can also branch directly to another purPur-chase order or purPur-chase requisi-tion:

- Create a purchase order

- Display/Change an existing purchase order

- Select a different purchase order than the one displayed

The purchase order transaction (ME21N) is a single-screen transaction. That is, all the rele-vant data of a purchase order can be maintained on a central screen. The following screenshot

displays the three screen areas of a purchase order: document header, the item overview and the item details. On the next screen, the forth screen area document overview is highlighted:

- The document header contains information valid for the whole document such as the vendor address, the organizational levels or overall status of the purchase order.

- The item overview shows the positions of the purchase order. Here you can enter the main data such as material, quantity, delivery date, price and plant. You can see that the purchase order has two items. The first item (line) contains 100 units of the material Gearing-9999, the second item contains 10 units of the same material. The difference between the two items is that the second item is procured as consumable material directly for a cost center. You can see that from the entry in the second column. The "K" indicates that the material is procured for a cost center. The first item in the purchase order is procured for stock.

Since SAP ERP 6.0, it is also possible to integrate Web-based catalogs in pur-chasing. This means the item data can also be copied from a catalog. If you want to connect a catalog, the catalog needs to comply with the Open Catalog Interface (OCI) standard. You can integrate just one catalog

- The item details area shows the details of an individual item. That is, when you mark a row in the item overview, you can display further information of the item in the item details. Here you enter additional data if desired or necessary for a particular item such as additional texts, account assignment specifications and confirmations.

Figure 46: Purchase Order Transactions – ME21N, ME22N, ME23N

The next screenshot displays the forth screen area Document overview: In the document overview, you can display different purchasing documents such as purchase orders, requests for quotations and purchase requisitions.

Furthermore, you can see that all screen areas can be opened and closed individually and, thus, influence the size of these screen areas.

Examples:

- If you close the header and item detail, the size of the item overview is then increased.

The same goes for the purchase order header, item overview and the item details, and also for the document overview and the help function.

- If you close and then reenter the purchase order transaction, the screen is in the same format as it was when you left it. If the document overview and the header were closed and the item overview and item detail were open, this same screen format is displayed.

Figure 47: Purchase Order Transaction - Navigation

With the button , you can maintain the user-specific settings of the transaction.

With this function, you can set your default settings and specify, e.g., that the document over-view is set automatically when the transaction is started. In addition, a help function can be displayed like the document overview. You can display or hide this help area by choosing Help. While the help area is open, you can keep working in the transaction at the same time.

Enter names instead of numbers

Some fields in the purchase order screen allow the entry of both names (e.g., the name of the vendor) and keys (e.g., vendor account ID 100315). This is valid for the fields Vendor, Mate-rial group, Plant and Storage location. If you enter a part of the name in these fields, the sys-tem proposes the corresponding data. If the syssys-tem cannot determine the data uniquely, you will receive a list of the possible entries to choose from. If, for instance, you enter “khat” in the Vendor field, the system would propose vendors Taymaz Khatami, Pouyan Khatami, etc.

3.1.4.3 Issuing Messages

In order to transmit purchasing documents to a vendor, the system generates a message for each document created in the SAP system. A message is a document in output format for communication to vendors and should not be confused with, e.g., system messages. The gen-eration of messages is based on the condition technique (same resp. similar like for conditions in the master data). All purchasing documents created can be displayed and issued in this message format. That is, each time you create a RFQ, a purchase order, a contract or a sched-uling agreement, the system creates a message from the document affected. The message is then stored in the message queue, which contains all messages that have not yet been trans-ferred to the vendors. The output can then be sent, e.g., via printer, fax or an EDI system to the vendor. To issue the message from the message queue, there are the following options:

- Issue immediately: The system issues the message directly from the queue, in other words, as soon as you save the document.

- Issue later: You either schedule a background job (for the program RSNAST00) that processes the message queue in determined intervals or you start the issue directly from the purchasing menu. As a rule, you issue the messages by using the background job and start the issue manually only as an exception (such as for rush orders).

In SAP ERP you can set which headers and item-based texts are issued. The header text is issued at the top of a purchase order and contains general applicable information, i.e., infor-mation valid for each purchase order item. Item texts describe a purchase order item more precisely. You can include and issue a standard text as well.

In the ordering transaction ME21N, you can use the button to display the docu-ment preview on your screen before you issue or print it.

Figure 48: Issuing Messages