Type of PO For which type of Goods/ services Prerequisite Additional

of Material Requirement if any

1. Standard For Regular Inputs Purchases 1. Material Source list if
Master mandatory in
2. INFO customizing.
Record-
Standard
2. Bulk For Consumables consumed in huge Material Source list
It is know as Limit PO too quantities of negligible value like Master Not required
( But with Limit of value for various stationery items, different NOT
better control) house keeping items , HCL of 30 Required
paisa per kg cost etc.
3. Blanket For Critical / Important /Costly Material Source list
Consumable goods like Safety Master Not required
equipment's , PPES , Fire Fighting NOT
Equipment items consumed in huge Required
quantities.
4. Free of Cost For Free Sample received Material Source list if
Master mandatory in
Required customizing.
5. Third Party Delivery of material at Project Place 1. Material Source list if
or e-commerce Master mandatory in
2. INFO customizing.
Record-
Standard
Type of PO For which type of Pre
Goods/ services requisite
6. Text For outer packages Material Source list not
which can not be Master required
stored by us , NOT
scrapped by us , or Required.
burnt by us & Vendor
to take back
immediately after
delivery.
1. Standard Purchase Order
1) PURCHASE ORDER – CREATE-Menu Path PO CREATE– Logistics-Materials Management-
Purchasing- Purchase Order – Create-Select – PO – Standard type NB - Transaction ME21N

There are 3 parts of the PO :Header , Item overview & Item details .

We have to enter : IN HEADER- Purchase Organization, Purchase Group & Company

1. This header is applicable to all the items under all the plants & all storage locations in
the Items
1a. Vendor : to be entered which is registered under above at the TOP

After entering Vendor at the top , we have to enter PO date , we can put past or future
Date.
2. In Delivery / Invoice : Payment terms , if in Vendor Master they are not maintained.
If in Vendor Master they are defined then will appear automatically. We can change the
Same too. The system will allow payment after the period specified in the same.
3. Text : As Purchase Order is a legal document , we have to be careful while creating PO.
In Texts , we have to enter the following –
a) Header Text - In case of dispute in between the company & vendor, the court of law
jurisdiction is Mumbai High court.
This is required as sometimes vendor files a suit in court of law who are far away from
the company .
b) Header Note – Important note related to Purchase Order regarding discussion or
Negotiation etc.
c.) Pricing types : Means what is included in the price & up to which point from the Vendor.

It depends up on INCO Terms. ( International Commercial Terms)

CIF – Cost Insurance Freight by the vendor up to Plant & Storage Location.
C&F- Cost & Freight by the vendor up to Plant & Storage Location & Insurance by us.
C&I- Cost & Insurance by the Vendor up to Plant & Storage Location. Freight by us.
Free delivery – Up to Plant & Storage location with Unloading.
Ex Work- Only Out side at the gate of the Vendor.
FOB etc. – Free On Boarding Sea Port / Air Port. etc
d) In Deadlines : Enter deadlines of Purchase Order means validity of Purchase Order

e) Terms of Delivery : How to deliver the material by the vendor

f) Shipping Instruction : Means how the vendor will pack & dispatch the material from
Vendor to our receiving end

g) Terms of Payments : When we will pay for the goods receipt.

For example immediate /Or/ after 30 days from bill receipt date, but only after approval
Of the material.
h) Warranties : In case of Engineering machines / goods purchase, we can add this text
fields

i) Penalty for breach of contract :

j) Guarantee : to replace within specific period

k) Contract rider (Clauses) : additional details, conditions, or terms of a contract.

If Purchase order is created with reference to contract
l) Asset : If you are going to purchase the material which will be the part of
Any asset in future , we will have to put remark so it can be unloaded near the
particular asset for assembly.
& the material will the part of the asset for depreciation as per indirect taxation rules.

m) Other contractual stipulations : stipulation might put some sort of limit on the PO.
Which will not be extended
n) Delivery : Any information about delivery can be entered here

o) Vendor Memo General Or Specific: - Vendor Specific text can be entered here.
For example : Please supply material from your Mumbai Plant.
In Item Over view of Purchase Order enter Material code, Qty, Date , Plant , Storage
Locations, Requisitioning Person
We can add multiple items of same company of multiple plants & multiple storage
locations OR single item too as shown in next screen.
“ DO NOT ENTER SERIAL NUMBER of Item .
System takes as 10/20/30-
In Item overview : After entering Material code, PO Quantity, Order Unit, Delivery Date,
Net Price etc.

Please enter Plant , Storage Location means Warehouse , Requisitioner name or

Department
For proper delivery of the material.
In Item detail : Enter 1 by 1 field as below : By clicking next item we can go for next item

1. In Material Data : Vendor Material number if you have material catalog of the Vendor

2. In Delivery : Enter Over delivery & under delivery tolerance : as Material in tanker
Or consumable materials like nails , liquid soap can not be supplied in exact
Quantities.
Shipping Instruction : By Truck /Tanker / Container
Stock Type : means whether unrestricted means approved , Quality Inspection means
To be tested material Or Blocked material means reserved or restricted for some
Purpose
Shelf life : Means Best before date use.
Inco terms : Means International commercial terms as explained in pricing type of
Header text
 3. In Invoice : Input Tax – Tax code after checking percentage of tax

4. In condition tab : we can add Freight & Insurance

5. In text : we can give instruction in delivery text of individual Item.

We can add in item text information about the particular line item
6. In confirmation :
A}. We can define : Acknowledgement Required
B}After receipt of Order acknowledgment add reference of acknowledgement by
Transaction Change PO ME22N

Check the PO –

WE WILL GET FOLLOWING GREEN TICKED MESSAGE

For above Green Or Yellow indicator , we can go ahead.

& THEN SAVE . System creates PO

 2. Bulk PO – This is also known as Limit PO means it has value limit
1. Header Same as Standard PO
2. In item Overview:
In Item Category- I tab – We have to select as B – Limit ( means value limit)
In account assignment – A tab – K - Cost center means in which department it will be used
DO NOT ENTER MATERIAL CODE
In PO Quantity tab – 1 & AU in In OUN – Oder Unit– Activity Unit means 1 purchase Activity
Date Category : Enter Day “D”
Delivery Date : Put year end date 31.12.2023 as this PO is open UP TO the year end.
Net Price = 0 per 1 AU
Material Group : Miscellaneous
Plant & storage location where the material is to be delivered
Enter : Requisitioner ( means department )
In Item means Item Details
First enter Limit means limit of value going to be spent on Purchasing of House
Keeping Materials up to year end for the year . Add 5% for overall limit.

Enter cost center normally it is corporate , house keeping, Administration etc. for
house keeping materials , stationary which are used in Bulk quantities .

GL account system takes automatically , but we can change as consumption or cash

 In Invoice Tab : Tax code means GST to enter .
Tick on Invoice receipt to Book the invoices time to time. There will be no goods
Receipt in SAP as only value is entered with limit.
Final Invoice & GR Base -IV not to select as there will not be GR of these items .
We do not keep the material in stock , value of these items is debited to cost
center and distributed to all departments by system.

In Item - Texts tab – Item Text - enter items to be supplied by the vendor
 In PO Text : Enter Material PO TEXT - PO related text

In Delivery text – You can enter where to deliver material

In Confirmation Tab : as per sr. no. 1 standard PO

Check the PO .

& THEN SAVE. We will get PO number created

3. Blanket PO – This is also known as Limit PO means
But it has NO value limit so blanket

It is to be used for critical items , Safety Items like PPES , Hand Gloves , Helmets,
Safety Goggles, Safety Shoes , Fire Extinguishers etc.
Or very low cost items like HCL 30 Paisa per kg.
HEADER & ITEM over view – Same as Bulk PO ( Please refer Bulk PO)
Only Requisitioner : as safety Department
In Item means Item Details
In Limit Tab : Tick No Limit means Blanket Limit & enter only expected value for the year
which can be spent for safety items through out the year .

In Account Assignment Tab : Enter GL Account & Cost Center of safety Or Corporate

In Tab of Invoice tax , Condition, Text , confirmation – enter as per Bulk PO.
There will be only invoice receipt tick , NO GR –no tick in GR-based IV (invoice verification)

Then check
& save the PO. System will create PO number .
4. Free of cost PO –
This type of POs are used for Samples received for test from Vendors .

In all Industries keep record of samples received & their results.

All the fields as per Standard PO.

In Header Text TAB : It is a Free sample for Testing PO. & NO PAYMENT , to
add.

In Invoice TAB NO tick for Inv. Receipt , Final Invoice & GR Bsd IV as it is free PO
At Item level in Text enter in delivery Text
To be delivered at RM LAB in PLANT 1000
5. 3rd Party PO –
This type of POs are used for delivery of the material to 3rd place .

For example any Project work / assembly work is going on at distance to save
logistic cost .
Or by e-commerce deliveries .
Or Direct delivery to Sub contractor ( In this case enter Vendor code)
Or Direct delivery to Customer ( In this case enter Customer Code)

All the fields in Header , Item overview & Item means detail from Items
as per Standard PO.
For 3rd party following additional small entries needed.
In item over view
Account assignment Third Party
& Item Category Third Party
 Enter Requisitioner

Under Item means details of Item

Enter 3rd party address of delivery of Goods from the vendor.

In invoice enter Input tax code & also check tick on invoice receipt only.

Final Invoice & GR-Bsd IV does not come in to transaction as it is not

Received in Plant & storage location.
Enter Text field wherever required , Check & Save the PO
6. Text PO – Information about outer packing & supplying the goods .

Outer packages which can not be stored by us , scrapped by us , or burnt by us

& Vendor to take back immediately after delivery.

1. Header Same as Standard PO

2. In item Overview: all the functional as Standard PO
In this type of PO item category T-Text to be used along with 1st normal purchase item
2nd text item for packaging .
Use item category T-Text – ONLY Enter instruction
in Short Text As “Packed in returnable 20 feet container”
Enter Only material group.

In Item text of item 20 – we can use for instructions. Check & save