Blog-Understanding the Types of Purchase Requisitions in SAP MM module

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Understanding the Types of Purchase Requisitions in SAP MM

In SAP Materials Management (MM), the purchase requisition is a critical document in the procurement process. It is essentially an internal request to procure goods or services, initiated by users within an organization, which is then reviewed, approved, and processed by the purchasing department. The type of purchase requisition determines how it is processed within SAP MM, and understanding the different types is crucial for effective procurement management. In this blog, we’ll dive into the various types of purchase requisitions in SAP MM and when they should be used.

What is a Purchase Requisition?

A Purchase Requisition (PR) in SAP MM is a formal request to the purchasing department to acquire materials or services. It contains information such as material type, quantity, delivery date, and cost center. The purchase requisition is the first step in the procurement cycle and acts as a request for the purchase order (PO), which is ultimately sent to suppliers.

Once a purchase requisition is created, it undergoes approval workflows, and the purchase order is created either manually or automatically depending on configuration settings and system functionality.

Types of Purchase Requisitions in SAP MM

SAP MM offers different types of purchase requisitions, each serving distinct business needs. The classification of these types plays a significant role in defining how the PRs are processed and routed within the system.

1. Standard Purchase Requisition

This is the most common type of purchase requisition used for regular procurement needs. It is created manually by users who require goods or services. Typically, this PR is associated with a specific material or service, and users can specify details like quantity, delivery date, and account assignment.

Use Case:

• When a user needs to procure standard items like office supplies, raw materials, etc.
• When a specific purchase order does not yet exist.

Key Features:

• Can be created for materials and services.
• Allows manual entry of data such as vendor, material group, or special instructions.
• Used for both internal and external procurement.

2. Consignment Purchase Requisition

A consignment purchase requisition is used when materials are delivered to the company but remain the property of the supplier until consumed. This type of purchase requisition is typically used for stock that is held in consignment inventory, meaning the organization doesn't own it until it is used.

Use Case:

• When materials are received but ownership remains with the vendor (e.g., spare parts, raw materials).
• Frequently used in long-term supplier relationships.

Key Features:

• Does not trigger a purchase order right away.
• Used for materials held in consignment stock.
• Helps track stock consumption for eventual billing to the company.

3. Subcontracting Purchase Requisition

Subcontracting PRs are created when the company needs to send raw materials or components to a third-party vendor for further processing, manufacturing, or assembly. The subcontractor performs the work and then returns the finished goods to the organization. This process is managed through a subcontracting PR in SAP.

Use Case:

• When outsourcing certain manufacturing processes or when specific components need additional processing.
• Often used in industries like electronics, automotive, and textiles.

Key Features:

• Includes both the raw materials being sent and the service required for processing.
• Allows tracking of both goods and services in the procurement process.
• Requires close monitoring of the work done by the subcontractor.

4. Stock Transfer Purchase Requisition

This type of PR is used when goods are being transferred from one plant to another within the same organization. In SAP, stock transfer requisitions are used to move stock between storage locations or plants, without involving external vendors.

Use Case:

• When inventory needs to be moved between different plants or warehouses.
• Frequently used in multi-plant organizations for stock redistribution.

Key Features:

• Does not involve external vendors or suppliers.
• Involves intercompany stock movements.
• Requires no purchase order as no external purchase is involved.

5. Framework Agreement Purchase Requisition

Framework agreements are long-term procurement contracts between an organization and a vendor. Purchase requisitions created against these agreements are typically tied to specific terms such as pricing, quantity, and delivery dates over an extended period.

Use Case:

• When the company has an ongoing contract with a supplier for repeated purchases over time.
• Suitable for regular or bulk procurement needs.

Key Features:

• Can be tied to Quantity Contracts or Value Contracts.
• Reduces the need to create individual purchase requisitions or purchase orders for each order.
• Helps streamline the purchasing process by enabling flexible and long-term procurement.

6. Services Purchase Requisition

A services PR is used when an organization requires services rather than tangible goods. This PR type is specifically created for services such as maintenance work, consulting, or any other service-related procurement.

Use Case:

• When the company needs to procure external services (e.g., cleaning, IT services, consultancy).
• Suitable for non-material procurement.

Key Features:

• Does not involve material, but rather a specific service.
• Allows for tracking service specifications, work descriptions, and service terms.
• Typically linked to a purchase order for services (PO for services).

7. Internal Purchase Requisition (Non-Material Purchase)

This PR type is used when the request is for non-material goods, such as services or consumables that don't need to be tracked in inventory. These PRs are often used for internal purposes like spare parts, office supplies, or administrative items.

Use Case:

• When non-material items like consumables or services are needed.
• Common in administrative departments or for internal services.

Key Features:

• Allows creation of requisitions for items that are not stored as inventory.
• Flexible in terms of how goods or services are categorized.

Conclusion

In SAP MM, purchase requisitions are vital for streamlining the procurement process. By understanding the different types of purchase requisitions, businesses can tailor their processes to fit their specific procurement needs. Whether it’s for standard materials, subcontracting, or long-term agreements, each PR type ensures the right goods and services are sourced in the most efficient manner.

As businesses grow and procurement becomes more complex, utilizing the right type of purchase requisition can help increase operational efficiency, reduce procurement cycle times, and improve supplier relationships. Configuring and managing PRs correctly in SAP MM is therefore key to ensuring a smooth and responsive procurement process.