Guide to Blanket Purchase Orders
In the case of procurement we usually come across scenarios where we are procuring goods/services of low value/importance and this action maybe repeated over a period of time, in this case we make use of Blanket Purchase Orders.
Let me help you with an example, purchase of Maintenance/Office Utility materials/stationery are procured time and again, here we can limit the posting of GR/SES.
Why Blanket Purchase Order ?
1)Blanket PO nullifies the need of Material Master/Service Master/Goods Receipt or Service Entry Sheet posting and it we can make direct invoice posting.
2)As a user, there is provision to maintain a validity period in the Purchase Order.
3)Additionally, we can maintain a “Limit” to put a cap on the total spending.
4)If the validity period expires or the limit is extended, “Invoice will be blocked for Payment” .
How To Work With Blanket Purchase Order ?
1)Create a Purchase Order of type “FO-Framework Order”, Account Assignment Category as “K-Cost Center”, Item category as “B-Limits”.
In case of Limits, the Expected Value is similar to Net Price and Overall Limit is the maximum amount of Invoicing to be allowed for this material/service.
Additionally, we can also maintain Validity Period in the header.
2) Post an Invoice(MIRO)
Here an error message is thrown as the Invoice value exceeds overall limit as amount is greater than the overall limit specified in Purchase Order(Tolerance limits might also comes into the picture).
If we go ahead and try to post the same, it will be blocked for Payment.
Similar action will come into force if the Invoice Date is outside the validity period.
Creation of a new purchase order frequently for procurement of goods of less importance and taking delivery against the order on a recurring basis is frequently considered uneconomical and time consuming, Blanket Orders are here to our rescue.
Now that we have a brief overview of the practice and use of Blanket Orders, we can suggest the same for our business processes as and when required.
Good one Salman.
keep adding value to others life.
if you would have added few info about GL account , how to add or whether it will pick automatically.
Thanks Prashun !
Great Point, Noted 🙂
Clear explanation... hope this will help a lot for many
Nice explanation , where we can avoid long cycle of GRN/SES by just paying inoicve bills.
thanks a lot for this introduction.
I have a question: How does this apply to SAP S4 Hana?
Is the item type B also supported by the new Fiori apps (didn't work for me yet)
or do we have 2 separate, incompatible roads now:
I would be grateful for some comments or reading advice.
On S/4 Hana 1909 you can create a Framework Order in two ways:
Please give it a try and revert,
Hi Syed Salman ,
my question goes into the same direction as the one of Martin Plewnia:
How does the Fiori approach to Limit Orders differ from the ECC approach?
Some points already mentioned:
Do you (or someone else) have an idea on how SAP will go forward with this feature in the future?
Nice note and Very well explained. Thanks to Salman
but, if the Validity date of this PO (Framework) in the past Invoice can be done no issue for that.
Only the Invoice will be blocked in case the value is exceeded the overall value,