The purchase order is the formal order to a vendor. What it says becomes the reference for receiving and invoice verification, which makes it the central document in MM.
Structure
| Level | What it holds |
|---|---|
| Header | Vendor, order date, payment terms, currency, purchasing organisation and group |
| Item | Material, quantity, price, receiving plant, account assignment, item category |
| Delivery schedule | Quantity per delivery date, supporting split deliveries |
Account assignment category
The account assignment category decides who bears the cost of what is bought.
| Code | Meaning | Accounting at receipt |
|---|---|---|
| (blank) | Stock item | Posted to inventory |
| K | Cost centre | Expensed on receipt; never becomes stock |
| F | Order | Charged to an internal or production order |
| P | Project (WBS) | Charged to a WBS element |
| A | Asset | Capitalised to a fixed asset |
| C | Sales order | Held as sales order stock |
Item category
| Code | Meaning | Characteristic |
|---|---|---|
| (blank) | Standard | Ordinary purchasing |
| L | Subcontracting | Components supplied to a vendor for processing |
| K | Consignment | Vendor-owned stock held on site; liability arises on consumption |
| U | Stock transfer | Movement between own locations |
| D | Service | Carries service lines confirmed by entry sheets |
| B | Limit | Only a value ceiling is agreed, consumed by actuals |
From requisition to order
A purchase requisition is an internal request, entered by the business or generated by MRP.
- Create the order manually with reference in ME21N
- Assign a source with ME57 or ME58 and then convert
- Convert in bulk automatically with ME59N, which requires the auto-PO settings
Automatic conversion needs three things: the auto-PO flag on the material master purchasing view, the same flag on the vendor master, and a purchasing info record carrying a price. With all three, requisition to order runs unattended.
Release strategies
Requiring approval above a value threshold is implemented as a release strategy, available for both requisitions and orders.
| Element | Role |
|---|---|
| Release group | Groups strategies together |
| Release strategy | The approval pattern โ which codes, in how many steps |
| Release code | Represents an approver |
| Characteristics and class | The conditions that select a strategy โ value, purchasing group, material group |
| Release indicator | Controls whether the order can be printed before approval |
A design such as "below one million yen, one approval; above, two" is straightforward. Until release is complete, the order is not sent to the vendor.
Sending the order
How the order reaches the vendor is governed by message control, supporting print, fax, email and EDI per vendor and purchasing organisation.
Output determination also uses the condition technique, with access sequences and condition records exactly as in SD pricing.