Blanket Purchase Order

Blanket POs are often appropriate for low-value materials and are used to procure
consumable materials and services that are frequently ordered from the same supplier.
Blanket POs are valid for a longer term such as for a year or two and with a value limit.

Consider, for example, a business that supplies their offices with general cleaning and
janitorial supplies, ordered on a bi-weekly or monthly basis. This company should use a
blanket PO rather than creating a separate PO each time they need supplies. When the
material is consumed or services are performed, an invoice is posted in the system with
reference to the PO, and no goods receipts are posted in the system. Process costs are
often in total contrast to a comparatively low requirement value and don’t bear any sort of
relation to the value of materials or services procured. You can reduce these process
costs, which may be very high in the case of procurement costs, by using a blanket PO
instead of a standard PO. Such a single long-term PO can be used to procure a variety of
materials or services whose modest value does not justify the high processing cost of
issuing a series of individual POs.

The blanket PO process has several business advantages that result in lower transaction
costs, as follows:

1. Blanket POs are valid for the long term; therefore, you don’t need to create them every
time you reorder supplies.

2. A goods receipt isn’t required.

3. Material master records aren’t required.

Create Release Order (Purchase Order)

Path: - SPRO > IMG > Logistic > Material Management > Purchasing > Purchasing
Order > Create > Vendor/ Supplying Plant Known.

T Code: - ME21N

Step I: -Select document type FO (Frame Work), Item Category B(Limit), Account
Assessment Category K, Overall Limit
Step II: - Invoice Receipt
.

Step III: - Click on Edit button

Step IV: - Check Invoice in PO