Blanket Purchase Order

Blanket Purchase Order

• Blanket purchase orders enable you to procure low-value items quickly, easily, and efficiently.
• Blanket purchase orders are made when you know what good or service is needed, but the
timings and amounts are uncertain.
• They anticipate the need of goods and services over a set period i.e. for a predefined period.
• Terms and conditions are agreed upon, as well as spending / value limits.
• It has the document type FO.
• The purchases can be made multiple ways, some are made by phone, via business websites, and
of course the in-store purchases.
• Blanket purchase orders are not to be referred to as “Open PO’s” as this is an incorrect term. All
PO’s are open until closed and this is not specific to what a Blanket entails.
• Blanket PO’s cover the items described in the description only, within the amount approved, and
only from the vendor associated with the PO. They are not to be overspent as you have only
requested to encumber the amount on the PO. Any amount over is not guaranteed available
funds and would be considered an unauthorized purchase.
Blanket Purchase Order- An example
• You know staples will be needed throughout the year in your
company. You know how many is likely to be needed during this
period, but you’re uncertain when.
• It’s cost-effective, then, to agree with a supplier that for the next year,
you’ll buy your staples from them, possibly setting out rough amounts
and establishing the price.
 Blanket Purchase Order
The most important characteristics of a
blanket purchase order are:
• Order type FO (framework order)
– Validity period in header of purchase
order (field selection)
• Item category B (limit)
– Limit in the item
– No material number
– Account assignment category U
(unknown) is allowed
– No goods receipt or service entry
• Accounting data for the item suggested
in invoices
• Additional or multiple account
assignment possible in invoice
verification
• Check of validity period and limit in
invoice verification
 Create Blanket PO
• PO type: Framework Order (FO)
• Vendor:
• Header /ORG Data
• PO:1000, PG:001, CC:1000
• Additional Data
• Validity Start Date: <today’s date> ;Validity End Date :
• Item Details :
• Account Assignment Object : U (Unknown)
• Item Category : B (Limit)
• Short Text – office Supplies##
• Enter the following data in the item details on the Limits tab page:
• Overall Limit : 6000 ; Expected value : 5000 (The “Expected value “is the value that the item is
not likely to exceed. Among other things, it serves as a criterion for a possible release
procedure. In addition- Depending on the account assignment category, a commitment is also
created in CO. This value is also printed on the purchase order.)
• Because no Goods Receipt (GR) will take place, the GR indicator is switched off when
the item category is selected.
 Procurement via Blanket Purchase Order
• You do not have to define the account
assignment when you create the blanket
purchase order.
• You cannot use RFQs or contracts. You can
create a purchase requisition (optional) and
then a purchase order.
• There is no goods receipt (for services, there
is no service entry or service acceptance).
Invoices are posted directly for the purchase
order.
• You have to use Logistics Invoice Verification
to check invoices relating to blanket
purchase orders.
Invoice
• Multiple invoices can be processed.
• invoices must be processed within the validity period specified in PO.
• The total value of invoices must also not exceed the limit specified in
PO item.
• During invoicing, if the date is outside validity period or the amount is
bigger, either a Warning or Error will occur. This setting is done in
customizing.
Advantages of Blanket Purchase order
• Low transaction costs, as these have a longer validity
period you do not require a purchase order for
individual procurement transactions
• No goods receipt or entry of services is performed
• You do not have to specify a material number
(material group instead) Account assignment can be
defined in purchase order, but is not mandatory
• Account assignment and multiple account assignment
can be changed in Invoice Verification .
• Validity period and limit are checked in Invoice
Verification