Create Purchase Organization for Planning

Outcome

Purchase organizations of type 1='Planning' are created in 'Purchase Organization. Open' (PPS099). The purchase organization codes are stored in table PPPORG.

Purchase organization is connected to a warehouse in 'Purchase Organization. Connect Warehouse' (PPS199). The purchase organization connection to a warehouse is stored in table PPPWHL.

Before you start

Use of purchase organization for planning must be activated on 'Settings - Purchasing' (CRS780/H), parameter 66-'Use of purchase organization: Price/Planning', field 'Use purchase organization for planning'.

A facility, that represents the central purchase department, must exist in 'Facility.Open' (CRS008).

Using purchase organizations for planning

Purchase organization for planning are used to enable creation of purchase orders with order lines on multiple facilities. This is achieved by using purchase organization as a consolidation object and connecting a 'buying facility' to the purchase organization.

Purchase organizations are created in (PPS099). Type 1='Planning' purchase organizations can only be created if the use of purchase organizations for planning is activated on (CRS780/H) parameter 66 'Use of purchase organizations: Price/Planning'. If this parameter is activated, it is mandatory to use purchase organization of type 1='Planning' on planned purchase order, purchase orders, and batch purchase orders. The purchase organizations can be defined for central buying or local buying.

Purchase organizations for planning can be used in the following programs:

(PPS099)
(PPS199)
(PPS198)
'Planned Purchase Order. Open' (PPS170)
'Purchase Order. Open' (PPS200)
'Purchase Order Batch. Open' (PPS370)

The use of purchase organizations for planning are limited to purchase orders with purchase categories 20='Normal', 70='Subcontracting', and 10='Inquiry'.

Purchase organization for central vs. local buying

Purchase organizations for planning are mandatory in the purchase order entry. You can configure purchase organizations for use in both central buying and local buying. Using purchase organizations configured for local buying is useful, for example, if procurement is done locally in a certain division or for certain products.

Purchase organization for central buying

A purchase organization for central buying is connected to a facility. The facility of the purchase organization represents the central purchasing department which monitors procurement activities for the purchase organization. The facility of the purchase organization overrides the facility of the planned purchase orders created for the purchase organization. The facility of the purchase organization indicates the facility that is buying the goods on behalf of the demanding warehouses.

When using purchase organizations for central buying, planned purchase orders can be consolidated or purchase order lines added for warehouses on any facility within a division as long as it is connected to the purchase organization. Organizations can create such orders to take advantage of quantity discounts, or cost savings in administration, freight, and other charges. Ownership of the goods is in the demanding warehouses, and delivery from the supplier is to the demanding warehouse, without going through a DC.

Purchase organization for local buying

A purchase organization for local buying is not connected to a facility. It does not impact the facility of the planned purchase orders. Purchase orders for which a local purchase organization is used, act as a general purchase order. The purpose of the local purchase organizations is to indicate that a purchase order is locally managed and can be useful for information and in statistics.

Purchase organization validation

A purchase organization of type 1='Planning' can be used by warehouses when entering orders and order lines by connecting warehouses to the purchase organizations in (PPS199).

Multiple purchase organizations can be connected to the one warehouse. This is useful, for example, when you want to do both local and central purchasing in a warehouse.

Assigning purchase organization to purchase orders

Purchase organization is mandatory on planned purchase order, purchase orders, and batch purchase order. It is manually selected in the order entry.

For planned purchase orders, the purchase organization can be automatically assigned when the order is created.

In (PPS199) a purchase organization can be marked as a 'default purchase organization' for a warehouse on the E panel. A purchase organization marked as the 'default purchase organization' for a warehouse is automatically assigned to the created planned purchase orders for that warehouse.

Exceptions to the use of the default purchase organization in (PPS199) are defined in (PPS198), such as for products that should be purchased locally.

Follow these steps

Create purchase organization for local purchasing

Start (PPS099).
On the B panel, specify alphanumeric characters.
Select 'Create' to create a record.
On the E panel, select purchase organization type 1='Planning' and press 'Enter'.
On the E panel, specify the description and name.
On the E panel, leave the field 'Buying facility' (BFAC) blank.
Press 'Enter' to exit.

Create purchase organization for central purchasing

Start (PPS099).
On the B panel, specify alphanumeric characters.
Select 'Create' to create a record.
On the E panel, select purchase organization type 1='Planning' and press 'Enter'.
On the E panel, specify the description and name.
On the E panel, specify a facility in the field 'Buying facility' (BFAC).
Selected facility represents the central purchasing department and it:
- overrides the facility of the warehouse on all planned purchase orders created for the purchase organization.
- is used as the facility of the purchase order head for all purchase orders created for the purchase organization.
- is used as the facility of the batch purchase order head for all batch purchase orders created for the purchase organization.
Press 'Enter' to exit.

Connect purchase organization to a warehouse

Start (PPS199) from the menu or through the related option 11='Purchase Organization. Connect Warehouse' in (PPS099).
On the B panel, select a purchase organization and click 'Apply'.
Specify the warehouse you want to connect to the selected purchase organization.
Select 'Create' to continue on the E panel.
Select the check box 'Default purchase organization', if the purchase organization should be the default.
- Default purchase organization for a warehouse is automatically assigned to the created planned purchase orders. Rules to override this can be created in (PPS198).
- Warehouse can be connected only to one default purchase organization.
Press 'Enter' to exit.
The purchase organization is now connected to the warehouse and is valid to use on purchase orders created for the warehouse.

Generate purchase organization connection to multiple warehouses

Start (PPS199) from the menu or through the related option 11='Purchase Organization. Connect Warehouse' in (PPS099).
On the B panel, select a purchase organization and click 'Apply'.
Select function key F14='Generate' to continue to the I panel.
On panel I, the open fields are used to specify ranges that determine for which warehouses a connection should be created to the purchase organization.
The division fields are not editable when working with purchase organizations that have a buying facility in (PPS099/E).
Select the check box 'Default purchase organization', if the purchase organization should be the default in the selection criteria.
- Default purchase organization for a warehouse is automatically assigned to the created planned purchase orders. Rules to override this can be created in (PPS198).
- Warehouse can be connected only to one default purchase organization. If there are warehouses in the selection criteria that are connected to a default purchase organization, the creation of those records will fail. Information of which records have failed is available in 'Application Message. Open' (CRS420), application message type 172.
Press 'Enter' to create the warehouse connections to the purchase organization.

Parameters to set


Program ID/Panel	Field	The field indicates...
(PPS099/B)	Purchase Organization	...that the purchase organization is used to group warehouses for the use of purchase price agreements and purchase order planning. The field is defined in (PPS099). The purchase organization type determines the purpose of the purchase organization, which is purchase pricing or planning. Purchase organizations used for pricing are connected to the warehouses in 'Warehouse. Open' (MMS005) and purchase agreements in 'Purchase Agreement. Open' (PPS100). Purchase organizations for pricing are used for defining which warehouses to enable for use of the prices and conditions of specific agreements. Purchase organizations for pricing are limited to general purchase agreements, blanket agreements, and delivery schedule agreements. Purchase organizations used for planning are connected to the warehouses in (PPS199) and assigned to the planned purchase orders and purchase orders. Planned purchase orders that are connected to the same purchase organization can be consolidated to create cross-facility purchase orders for central buying. Purchase organizations for planning are limited to the purchase orders of the purchase categories 20='Normal' and 70='Subcontracting'. To activate the purchase organization for use in purchase pricing and purchase planning, set the '66 Use of purchase organization: Price/Planning' parameter in (CRS780).
(PPS099/E)	Purchase organization type	...the purchase organization type, which determines the use of the purchase organization. Alternatives: 0='Price' 1='Planning' Type 0='Price' purchase organizations create price purchase organizations that are used for the grouping of warehouses that share regionally, or centrally negotiated purchase price agreements. The price purchase organizations are connected to warehouses in (MMS005) and purchase agreements in (PPS100). To activate the use of type 0 purchase organizations in the price origin search, use the '66 Use of purchase organization: Price/Planning' parameter on (CRS780/H). Type 1='Planning' purchase organizations are used for the grouping of warehouses for purchase planning and consolidation. Purchase organizations of type 1 are connected to the warehouses in (PPS199) and assigned to the planned purchase orders and purchase orders. The type 1 can only be created (and is mandatory) if the use of the purchase organizations for planning is activated on (CRS780/H).
(PPS099/E)	Description	…the description of the current identity. It is a mandatory information.
(PPS099/E)	Name	...the name of the current identity. When you edit descriptions and names, and no name is specified, the first 15 positions from the description are treated as the name by default.
(PPS099/E)	Buying facility	...the buying facility of a purchase organization, which is used in the central procurement process to enable creating purchase orders with lines for multiple facilities. It represents the central procurement department in a central procurement process, buying centrally on behalf of a group of warehouses. The buying facility is automatically assigned to the planned purchase orders and to the purchase order header. It is set up as a general facility in 'Facility. Open' (CRS008) and can be connected to one or more purchase organizations. If the buying facility is assigned a value, the purchase organization can be used for central buying. Assigning a (planned) purchase order to a purchase organization that has a buying facility affects the facility of the order in such a way that the facility of the purchase organization overrides the facility of the order. Planned purchase orders or warehouses that are connected to the same purchase organization can be consolidated to one purchase order with lines for warehouses in multiple facilities. If the buying facility is blank, the purchase organization can be used for local buying. Assigning a (planned) purchase order to a purchase organization with a blank buying facility does not impact the facility of the order. The facility of the planned purchase order or purchase order remains as the facility of the warehouse. A buying facility can only be assigned to a purchase organization of type 1='Planning'.
(PPS199/B)	Purchase Organization	...a purchase organization type 1='Planning'.
(PPS199/B)	Warehouse	...the warehouse that is connected to the purchase organization.
(PPS199/E)	Default purchase organization	...that you should select the check box, if the purchase organization should be the default purchase organization for the selected warehouse. The default purchase organization is automatically assigned to the planned purchase orders created for the warehouse. A warehouse can only be connected to one default purchase organization. Overriding rules for which purchase organization to assign to the planned purchase orders, based on objects related to a warehouse or a product, can be defined in (PPS198).