SAP MM - Purchase Order Types

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SAP ERP was introduced so that procurement can be done efficiently in terms of time and cost. Procurement can be done for various types of goods and services. Procurement starts with creating a purchase order, i.e., a formal document given to vendors and it includes a list of goods and materials that are to be procured. Accordingly, purchase orders can be created for different types of procurement. The type of procurement can be maintained in a field that is known as item category as shown below.

For different procurement types, there are four types of purchase orders, which are as follows −

• Subcontracting Purchase Order
• Consignment Purchase Order
• Stock Transfer Purchase Order
• Service Purchase Order

Subcontracting Purchase Order

In subcontracting, the vendor (the subcontractor) receives components from the ordering party with the help of which it produces a product. The product is ordered by your company through a purchase order. The components required by the vendor (seller) to manufacture the ordered products are listed in the purchase order and provided to the subcontractor.

Follow the steps given below to create a subcontracting purchase order.

TCode to create Purchase Order: ME21N

Subcontracting Item Category: L

• Provide the TCode in the command field.

• It will take you to the purchase order screen.

• Provide all the necessary details such as the name of the vendor, item category, name of material, plant for which material is procured, and the date of delivery.

• Click on Save. Subcontracting Purchase order will be created.

Consignment Purchase Order

In consignment, material is available at the organization store premises, however it still belongs to the vendor (seller)/Owner of the material. If you utilize the material from the consignment stocks, then you have to pay to the vendor.

Follow the steps given below to create a consignment purchase order.

TCode to create Purchase Order: ME21N

Consignment Item Category: K

• Provide the TCode in the command field.

• It will take you to the purchase order screen.

• Provide all the necessary details such as the name of the vendor, item category, name of material, plant for which material is procured, and the date of delivery.

• Click on Save. Consignment Purchase order will be created.

Stock Transfer Purchase Order

In stock transfer, goods are procured and supplied within a company. One plant orders the goods internally from another plant (receiving plant/issuing plant). The goods are procured with a special type of purchase order known as the stock transport order.

Follow the steps given below to create a stock transfer purchase order.

TCode to create Purchase Order: ME21N

Stock Transfer Item Category: U

• Provide the TCode in the command field.

• It will take you to the purchase order screen.

• Provide all the necessary details such as the name of the vendor, item category, name of material, plant for which material is procured, and the date of delivery.

• Click on Save. Stock Transfer Purchase order will be created.

Service Purchase Order

In service, a third party provides services to a company. These services include maintenance functions such as electricity and oiling of machines. Follow the steps given below to create a service purchase order.

TCode to create Purchase Order: ME21N

Service Item Category: D

• Provide the TCode in the command field.

• It will take you to the purchase order screen.

• Provide all the necessary details such as the name of the vendor, item category, name of material, plant for which material is procured, and the date of delivery.

• Click on Save. Service Purchase order will be created.