Create and Manage Purchase Orders for Central Procurement

This document explains how you can create planned purchase orders and purchase orders when central procurement is activated in the company. This document focuses only on the specific details of central procurement in the purchase order entry, that is, the use of the purchase organization and facility in the order entry.

The concept explained in this document also applies to the batch purchase orders in 'Purchase Order Batch. Open' (PPS370).

The use of purchase organizations in the purchase order entry is limited to order categories 20='Normal' and 70='Subcontracting'.

Outcome

In a company where central procurement is activated:
  • planned purchase order is created for central vs. local buying.
  • purchase order (PO) is created from the released planned purchase orders.
  • purchase order is created manually for central buying by a central purchase department. Purchase order lines are created for warehouses on multiple facilities for which the central purchase department manages purchasing activities.
  • purchase order is created manually for local buying.

    For example, for purchasing items excluded from central procurement, or for creating purchase orders in a company where central procurement is enabled but in a division where purchasing is managed locally.

Before you start

You must enable central procurement and created purchase organizations for local and central buying with connected warehouses. See Settings for Central Procurement.

It is also required that you have completed the basic settings for the purchase flow:

Ensure the process for creating purchase orders is understood, see Create, Release, and Display Purchase Order.

Ensure the process for PO consolidation is understood, see Settings for Release of Planned Purchase Order .

Create and release planned purchase order in central procurement

Manually create planned purchase order
  1. Start 'Planned Purchase Order. Open' (PPS170/A).

    A planned purchase order can be registered manually by using the A panel and specifying the warehouse and item number.

  2. Select 'Create'.
    • (PPS171/E) 'Purchase organization'

      • is mandatory for order category 20='Normal' and 70='Subcontracting', if central procurement is enabled in the company.

      • is automatically retrieved from programs in this order:
        1. 'Purchase Organization Selection. Open' (PPS198)
        2. 'Purchase Organization. Connect Warehouse' (PPS199), default purchase organization of the warehouse.
        3. If 'Purchase organization' is not found, the field is left empty and must be manually selected before the PPO can be released.
      • is editable. Changing the purchase organization triggers an update of the facility for the planned purchase order.
        • 'Buying facility' on 'Purchase Organization. Open' (PPS099/E) is applied.
        • If the selected purchase organization has an empty 'Buying facility' field, the facility of the warehouse is applied.

      • The selected 'Purchase organization' must be connected to the warehouse in (PPS199).

    • (PPS171/E) 'Facility'
      • is not editable.
      • is retrieved from the purchase organization to which the planned purchase order is assigned, if the purchase organization is connected to a buying facility on (PPS099/E). A purchase organization with a 'buying facility' is used for central buying.

      If the selected purchase organization is not connected to a 'buying facility', then the facility of the planned purchase order remains as the facility of the warehouse. A purchase organization where 'buying facility' is empty, is used for local buying.

    • (PPS171/G) 'Consolidation group'

      'Consolidation group' with 'Purchase organization' and 'Country' as consolidation objects, must be used for central buying.

Creating planned purchase orders automatically

Planned purchase orders that are missing purchase organization, have an invalid purchase organization, or are missing an applicable consolidation group, get status 00 and cannot be released. Warning message A1, A2, or A3 is applied to give more information about details that need to be adjusted.

Release and consolidation of the planned purchase orders

These consolidation objects are available only when central procurement is activated and they are mandatory to use in central buying:
  • 'Purchase organization': Consolidation object that represents the purchase organization on the planned purchase order, which is available on 'Planned Purchase Order. Open' (PPS171/E).
  • 'Country': Consolidation object that represents the country of the warehouse of the planned purchase order. The field is available on 'Warehouse. Open' (MMS005/E).
When central procurement is activated, these conditions apply for the purchase order consolidation:
  • Planned purchase orders assigned to the same purchase organization and facility can be consolidated.
  • Using a purchase organization with a buying facility makes it possible to consolidate planned purchase orders for warehouses that belong to different facilities.
  • PO consolidation is not possible for warehouses that belong to different countries.
  • You can break PO consolidation by warehouse, even if a purchase organization with buying facility is used. This is useful when certain suppliers cannot receive consolidated POs across warehouses or facilities, but the purchase must be still centrally managed.
When releasing a group of planned purchase orders for a purchase organization that uses 'Buying facility', the PO data are created in this way:
  • The purchase order header is created on the facility of the planned purchase orders - the buying facility of the purchase organization.
  • The purchase order header is created on the warehouse of the first planned purchase order in the sorting.
  • The purchase order header is created on the purchase organization of the planned purchase orders.
  • The PO lines are sorted by the ID of the warehouse.
  • The PO lines are created on the facility of the warehouse of the PO line.
  • The PO lines are created on the purchase organization of the planned purchase orders.

Register purchase order for central buying

Register PO header for central buying
  1. Start 'Purchase Order. Open' (PPS200).
  2. Open the A panel and specify mandatory fields, such as 'Facility', 'Warehouse', and 'Purchase organization'.
    • 'Facility': For a central purchase order header must be the facility from the purchase organization field 'Buying facility' on (PPS099/E).
    • 'Warehouse': Warehouse must be connected to the purchase organization in (PPS199).
    • 'Purchase organization': The selected purchase organization must be one configured for central buying that is, connected to 'Buying facility'. The buying facility of the purchase organization must be the same as the selected facility on the purchase order header. Purchase order lines can be created for warehouses connected to the purchase organization of the purchase order header, and for any facility as long as it is within the division of the purchase order header.
  3. Select 'Create'
    • (PPS200/E)

      'Purchase organization': Once the purchase order is created, the purchase organization cannot be changed.

    • (PPS200/G)
      The G panel displays address fields. The addresses impacted in the central procurement process are:
      • 'Our Invoice address' is proposed from 'Internal Address. Open' (CRS235), based on the facility of the purchase order header. This way, invoices for central purchase orders can be directed to the address of the central purchasing department.
      • 'Final destination' is proposed from (CRS235), based on the warehouse of the purchase order header. Purchase order lines specified for other warehouses get a destination address, based on the address of that warehouse.

Register PO lines for the central purchase order

PO lines are specified in 'Purchase Order. Open Lines' (PPS201). For a central purchase order, the purchase order lines can be created for warehouses in any facility, as long as these criteria are met:
  • The warehouse is in the same division as the facility of the purchase order header.
  • Selected warehouses must be in the same country. The country is specified for the warehouse in (MMS005). PO line 1 can be created on any country and the following PO lines must be created for the warehouses in the same country.
  • The warehouse is connected to the purchase organization in (PPS199).
  • 'Multiple warehouses in PO' are allowed for the purchase order type in 'Purchase Order Type. Open' (PPS095), parameter 340-341.

Register PO for local buying

Register PO header for local buying

  1. Start (PPS200).
  2. Open the A panel and specify mandatory fields that are related to the central procurement:
    • 'Facility': For a local purchase, the facility of the purchase order header is the facility of the warehouse to which the goods are ordered.
    • 'Warehouse': The selected warehouse must be connected to the selected purchase organization in (PPS199).
    • 'Purchase organization': The selected purchase organization must be one that is configured for local buying, which means that the field 'Buying facility' is empty on (PPS099/E). When using the purchase organization for local purchases, purchase order lines can only be created for warehouses connected to the purchase organization of the purchase order header and belonging to the facility of the purchase order header.
  3. Select 'Create'.

    (PPS200/E)

    'Purchase organization': Once the purchase order is created, the purchase organization cannot be changed.

Register PO lines for local purchase order

PO lines are specified in (PPS201). For local purchase orders, the purchase order lines can be created for any warehouses that belong to the facility of the purchase order header, as long as these criteria are met:
  • Selected warehouses must be in the same country. The country is specified for the warehouse in (MMS005). PO line 1 can be created on any country and the following PO lines must be created for the warehouses in the same country.
  • The warehouse is connected to the purchase organization in (PPS199).
  • 'Multiple warehouses in PO' are allowed for the purchase order type in (PPS095), parameter 340-341.
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