Blanket Purchase Order (BPO) Standing Order Long-Term Contract Between A Supplier and An Organization

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Blanket Purchase Order
A blanket purchase order (BPO) is also known as a standing order. It's a long-term contract
between a supplier and an organization. The contract states that the supplier will provide
goods or services at a set price over a specific time period.
In SAP, Blanket Purchase Orders refer to the business process where you have a Purchase
Order with a validity period (start / end date) and a limit on the item. No Goods Receipt
takes place. Payment is triggered by Invoice.
Businesses use blanket purchase orders when they need the same goods on a recurring
basis over a specified period, such as an entire year. The delivery schedule may or may not
be predetermined.
BPOs are used by buyers to consolidate a number of smaller purchase orders into one large
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BPOs are used by buyers to consolidate a number of smaller purchase orders into one large
purchase. They include the same details as a PPO, with the exception that the quantity of
items remains unspecified, along with delivery details.
Multiple invoices can be processed. Main point is that invoices must be processed within
the validity period spesified in PO. The total value of invoices must also not exceed the limit
spesified in PO item. The validity period is spesified on PO Header Level, while the Limit is
on Item level. The creation of Purchase requisition is Optional.
Purchase Requisitions doesn’t have validity period fields, although the limit can be spesified
on item level. So if users create PR’s then they could type the validity period simply as text
in one of the long text fields.
During invoicing, if the date is outside validity period or the amount is bigger, either a
Warning or Error will occur. This setting is done in customising.
Examples on where this business process can be used include: Services: example buying
flowers, travel. Perticular if the receipt process is not very formalised. It is also sometimes
used for utilities (water, electricity…)























Pipe Line Material Procurement
In SAP, pipeline procurement is the process of material flowing from a vendor to a plant.
Pipeline materials are represented by the material type PIPE. Examples of pipeline materials
include:
• Oil from a pipe
• Water
• Electricity via cables

















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Blanket Purchase Order

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