Explaining the Difference Between Purchase Requisition and Purchase Order in SAP MM

When it comes to SAP MM, understanding the difference between a purchase requisition and a purchase order is crucial. Both play distinct roles in the procurement process.

Purchase Requisition:

A purchase requisition is a formal request made by a department or individual within a company to the procurement department to acquire goods or services. It is the first step in the procurement process and serves as a document to initiate the purchasing process.

Key points about purchase requisitions in SAP MM:

• It is used to communicate the need for goods or services to the procurement department.
• It includes details such as item requirements, quantity, delivery date, and cost estimation.
• Approval from relevant authorities is required before converting a requisition into a purchase order.

Purchase Order:

A purchase order is a legally binding document issued by the buyer to the seller, indicating the type, quantity, and agreed price of the products or services to be purchased. It represents a formal commitment to pay for the goods or services as per the agreed terms and conditions.

Key points about purchase orders in SAP MM:

• It is generated based on an approved purchase requisition.
• It includes specific details such as vendor information, item details, quantities, terms of delivery, and payment terms.
• Once issued, it forms a contractual agreement between the buyer and the seller.

Understanding the distinction between purchase requisitions and purchase orders is essential for effective procurement management in SAP MM.