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Blanket Purchase Order (BPO) in SAP MM.

In this topic you will learn about, what is Blanket Purchase Order, and you will
understand how to create Blanket Purchase order with Invoice.

What is Blanket Purchase Order

A blanket purchase order is a purchase order issued to one supplier for multiple
purchases of specific goods or services for a specific time-period and a not-to-exceed
predetermined amount. The blanket order allows purchases, within the terms of the
order, to be charged to that specific blanket order.

Blanket Purchase Order (Po’s) are often appropriate for low value materials and are
used to procure consumable materials and services that are frequently ordered from
the same supplier. Blanket Purchase Orders are valid for a longer term-such as for a
year with a value limit.

Purchase
Requisition PR
Reviewed and
approved.
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Blanket Purchase Order in detail explanation: -

An SAP blanket purchase order is used for purchasing consumables or services
from a vendor which can be repeatedly procured during a specific period of time.

Consumables include office or shop items such as pens, stationery, nuts or screws
and services like routine repair work and other maintenance. A limit is set on the
blanket purchase order and multiple Invoices can be processed provided that the
total of all the invoices does not exceed the overall limit.

• Blanket purchase orders have the item category B and document type FO.
• You do not need to know the account assignment for the individual materials
or services required at the time of ordering.
• You can enter it during the invoice verification process. If you entered account
assignment data in the purchase order, you can change it at the time of invoice
verification. (For example, you can change single account assignment to
multiple account assignment.)
• A goods receipt or the entry and acceptance of services performed are not
necessary in the case of blanket purchase orders. Provided that the value limit
is not exceeded, invoices can be posted directly with reference to the PO.
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Important Characteristics of Blanket Purchase

Orders
✓ New item category
✓ New order type (at field selection)
✓ Validity period in header of purchase order
✓ Limits in the item
✓ No material number.
✓ No goods receipt or service entry sheet
✓ Account assignment type "unknown" is allowed.
✓ Accounting data for the item suggested in invoices.
✓ Additional or multiple account assignment possible for Invoice Verification
✓ Validity period and limit checked in Invoice Verification

Industries implement Blanket Purchase order because of

below following reasons: -
Low transaction costs, as...

✓ These have a longer validity period

✓ You do not require a purchase order for individual procurement transactions.
✓ No goods receipt or entry of services is performed.
✓ You do not have to specify a material number (material group instead)
✓ Account assignment can be defined in purchase order, but is not mandatory.
✓ Account assignment and multiple account assignment can be changed in
Invoice Verification
✓ Validity period and limit are checked in Invoice Verification
✓ They are linked with budget control
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Blanket Purchase Order in SAP MM

The Blanket Purchase Order process has several business advantages that result in
lower transaction costs, as follows:
✓ Blanket Purchase Orders are valid for the long term; therefore, you don’t need
to create them every time you reorder supplies.
✓ A goods receipt isn’t required.
✓ Material master records aren’t required.

Prerequisites of Blanket Purchase Order

The basic components of the SAP blanket purchase order process are as follows

1. Create Framework Purchase Order

2. Create Invoice.

Create Framework Purchase Order

Create the SAP blanket purchase order via transaction code ME21N.

HEADER SECTION

In the header section of the purchase order, enter the following information for each
blanket item for the selected vendor:

Choose document type FO – Framework Order to categorize the order as a

blanket purchase order. Every purchase order is assigned a document type to
identify the purpose and functionality of the order.

Enter the vendor master number in the Vendor field. For our example, we use
vendor 9001 – Michaela Meier.
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Click the Additional Data tab in the header section and enter Validity
Start and Validity End dates for the blanket purchase order. The validity dates
provide the duration during which purchases can be made against the order. In our
example, we set a one year validity period, starting on 09/26/2017 and ending
on 09/26/2018.

Our example header data can be seen below:

ITEM SECTION

In the item section of the SAP blanket purchase order, enter the following details:

1. Select account assignment category K – Cost center to denote that a cost

center should be specified and that all invoices should be charged to that
cost center. The account assignment category list may contain standard and
customized categories.
2. Choose item category B – Limit. The item category of a purchase order
identifies which type of procurement is taking place and triggers certain
features. Item category B, for example, defaults a PO quantity of 1. This
item category also switches off the goods receipt requirement for the
blanket PO.
3. Enter text for the item.
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4. Specify the plant for the procurement. In our example, we use plant 9001 –
Berlin Distribution.

Our example item data can be seen below:

ITEM DETAILS
Click the Item Detail button to expand the section. Enter the
following information:

Click the Limits tab and enter the overall limit value. The total of all procurements
for this purchase order during the validity period cannot exceed this value. Select
the No limit tickbox if there should not be a maximum spend for the blanket order.
In our example, we set a limit of 5000 EUR as can be seen below:
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Click the Account Assignment tab. Based on the account assignment

indicator K specified in the item section, specify the cost center and G/L account that
all invoices should post to. In our example below, we specified cost center 1000 and
G/L account 400000.

Press Enter then Save . The purchase order will be saved as a framework order:
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Create Invoice
Now that we have an SAP blanket purchase order, we can begin posting invoices
straightaway. Remember that the item category B disables the goods receipt
requirement. Post invoices referencing the PO number via transaction code MIRO.

Once invoices have been posted, the invoice receipts will appear on the Purchase
Order History tab. In our example we have created three invoices which
total 5000 EUR, as shown below:
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Remember that our blanket purchase order limit was set to 5000 EUR. An
attempt to create an additional invoice that exceeds the limit will result in
the below error message:
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So we will have another scenario to have better understanding

about Blanket Purchase order
Step1:- Create Blanket purchase order in ME21N
Header Level:-
➢Enter Document type as FO Framework order
➢Vendor
➢Additional tab the validity start and end dates
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Step2:-
Item Level &Item overview
In Item Level select the Account Assignment Category: - K (Cost Centre)
& Item Category: - B (Limit)
Enter the Overall Limit & Expected Value .Then system will ask for GL
Code & Cost Centre
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Step3:- Invoice in MIRO

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Now check the Purchase Order History by using T-Code:- ME23N