Question Re: Blanket PO -GR Optional ? in Spend Management Q&A

Blanket PO -GR Optional ?

Former Member — Wed, 26 Jun 2013 20:01:35 GMT

Hello ,

Can someone please explain me the business case or usual requirement when the GR is optional for blanket PO ?

I know what is blanket PO but I want to know only the business case where it fits in . A simple example will be helpful

Regards,

Abaper

Re: Blanket PO -GR Optional ?

Former Member — Wed, 26 Jun 2013 21:14:13 GMT

Blanket PO is generally used for B, C Class items i.e. very low value items (consumables such as stationary or any other material)

Conventional Procure to Pay contains steps PR>PO>GR>LIV (RFQ Optional) and everytime we want to procure material we do a PO send to vendor and then receive through GR, whereas to fulfil business requirement in which we want to do a PO for example the whole year and do not want to know about the receivings only post invoices against them. This is where Blanket Purchase Order comes in, its for a period of time using Item Category B (Limit) and Account Assignment Category which if you don't know at the time of PO creation can use U (Unknown) and assign at the time of Invoice. So system will keep checking the quantity and date at the time of invoice. Its not 3-way match rather only 2-way.

Khurram

Re: Blanket PO -GR Optional ?

ravindra_devarapalli — Thu, 27 Jun 2013 02:24:33 GMT

Hi ,

Business Example

For some of the office supplies needed by your firm, you can simply phone your vendor to give notification of your requirements. The goods are then delivered directly to the individual offices, so that a confirmed

goods receipt does not have to be recorded in the system. To cover such transactions, you have created a blanket purchase order in the system.

You check each invoice you receive from the vendor against the limit and validity period of the blanket PO.

1. Lets say the BPO was created on Jan 1, and the requirement for procurement arises in March, June, October and December. In this case do we have to create a new PO with reference to BPO for each of these months?

Answer: there is no need to create the separate PO for each month. the use of framework order and item category B open the value limits and validity period. give the validity period as per your requirement and the value.

thru BPO you instruct the vendor before hand in this particular period you are going to buy these specific material of total amount assigned. you can call him and inform that you require that material, it is helpful in those cases.

2. If not, do we have to modify the BPO that was originally created?

Answer: if the material are not covered what you have agreed with him may be yes.

3.How does vendor receive our requirement for materials?

Answer: you can make a call or send a intimation about this.

4.Can we use ERS in this case for automatically generating invoices

Answer : yes you can.

I am writing below the complete process of BPO, this will clear your doubts.

The use of blanket purchase orders enables you to simplify the procurement process for low-value consumables and thus reduce costs

Advantages of Blanket POs

With certain procurement transactions, the costs of procurement are disproportionately high in relation to the value of the material or service involved. This is frequently the casewith office supplies (such as pencils

and notepads) and services of relatively minor importance (such as small repairs, cleaning work, and courier services), for example.

Procurement costs - which in the case of standard procurement processes can be quite high - are significantly reduced if a so-called blanket purchase order is created instead of a standard PO. Such a single long-term purchase order 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 main advantage of using blanket POs is thus the associated reduction in order processing costs. Transaction costs are lower with blanket POs because:

 The blanket PO is valid for a longer period.

 There is no goods receipt or service entry.

 It is not necessary to create PO items for individual procurement transaction

Re: Blanket PO -GR Optional ?

BijayKumarBarik — Thu, 27 Jun 2013 05:50:23 GMT

Hi,

Blanked purchase order created for consumable material (without master master) /service with a validity period such as one year where Goods receipt and Inventory are considered as Non-economical, so goods receipt is not required/service entry sheet not required and invoice is posted WRT Blanked purchase order.

Refer SCN blog for more:

http://wiki.sdn.sap.com/wiki/display/ERPSCM/Blanket+POs

Regards,

Biju K