How do limits and tolerances affect purchase orders?

Tolerances are limits that define the percentage of overshipped or undershipped items that you will accept. You can define tolerances at the following levels:

  • PO company - use PO Company Setup (PO01.1),

  • PO vendor and location - use Vendor and Purchase From Location (PO10.2), or

  • PO vendor - use PO Vendor (PO10.1), or

  • PO line - use Purchase Order Entry, (PO20), More button

The default hierarchy used to determine the tolerance:

  1. If a Purchase From Location is defined on the PO, the tolerances from Vendor Purchase From Location are used.

  2. If no Purchase From Location is defined on the PO, the tolerances from the PO Vendor are used.

  3. If no Purchase From Location is defined on the PO, and no tolerances are set up on the PO Vendor, the tolerances on the Purchase Order Company are used.

You can define an undershipment percentage to determine when to cancel backorder quantities. If items received fall short of what was ordered, they are marked as backorder amounts. If the amount that is backordered is within the tolerance you defined, the backorder is cancelled.

You can define an overshipment percentage to determine when receiving buyer messages are created. Receiving buyer message