Difference between Purchase Order and Purchase Requisition in SAP MM

In SAP MM, Purchase Order and Purchase Requisition are two commonly used terms in the procurement process. Below is a detailed explanation of the differences between the two:

Purchase Requisition:

• A Purchase Requisition is a request made by a department or individual within an organization for the procurement of goods or services.
• It is an internal document that initiates the procurement process.
• A Purchase Requisition contains details such as the quantity of items needed, delivery date, and the cost center to be charged.
• It serves as a formal request for the procurement team to initiate the purchase process.

Purchase Order:

• A Purchase Order is a formal document issued by the buyer to the vendor, confirming the details of the purchase.
• It is a legally binding document that outlines the terms and conditions of the purchase, including the quantity, price, delivery schedule, and payment terms.
• Once a Purchase Order is issued, the vendor is obligated to deliver the goods or services as specified in the document.
• It serves as a contract between the buyer and the vendor, providing clarity and protection for both parties.

In summary, a Purchase Requisition is an internal request for goods or services, while a Purchase Order is a formal document that serves as a contract between the buyer and the vendor. Understanding the differences between the two is crucial for effective procurement management in SAP MM.