What are key differences between a purchase requisition and a purchase order in SAP MM and how are they processed?

Key Differences Between Purchase Requisition and Purchase Order in SAP MM

When it comes to SAP MM, understanding the key differences between a purchase requisition and a purchase order is crucial in the procurement process.

Focus Keyword: Purchase Requisition vs. Purchase Order in SAP MM

Purchase Requisition:

• A purchase requisition is a request raised by departments or users to procure goods or services.
• It serves as an internal document that initiates the procurement process.
• It may include details such as quantity, required delivery date, and material specifications.
• Approval from relevant authorities is usually required before converting a purchase requisition into a purchase order.

Purchase Order:

• A purchase order is a binding agreement issued to a vendor for the supply of goods or services.
• It is a legal document outlining the terms and conditions of the purchase.
• Details such as item description, quantity, price, delivery terms, and payment terms are specified in a purchase order.
• Once approved, a purchase order commits the organization to pay for the goods or services as per the agreed terms.

Processing of Purchase Requisition and Purchase Order:

1. Upon receiving a purchase requisition, the procurement team reviews and validates the request.
2. If approved, the purchase requisition is converted into a purchase order, detailing the specific terms of the agreement.
3. The purchase order is transmitted to the vendor for execution, and once accepted, it becomes a legally binding contract.
4. Goods or services are then delivered as per the terms of the purchase order, and payment is made by the organization upon receipt and verification of the deliverables.

By understanding the distinctions between purchase requisitions and purchase orders in SAP MM, organizations can streamline their procurement process and ensure efficient utilization of resources.