PR to PO creation in SAP

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For any firm to run smoothly, effective procurement is crucial. Converting a purchase request (PR) to a purchase order (PO) is one of the most important procurement procedures. This change makes sure that the company gets the correct products or services in the right amount and quality, at the right price, and on schedule. Organizations looking to optimize their supply chain and procurement specialists alike must comprehend this process. The processes in the PR to PO generation process, its significance, and best practices for efficient management will all be covered in this article.

Table of Contents

What is a Purchase Requisition (PR)?

An internal document called a Purchase Requisition (PR) is created by a department or employee to seek the purchase of products or services. Usually, it contains information such as:

  • Item Description: Necessary.
  • Quantity: The quantity of goods or services provided.
  • Specifications: Any technical or quality standards.
  • Preferred Vendor: The supplier of choice (optional).
  • Date of Delivery: When the products or services are required.
  • Cost Center: For allocating funds internally.
  • Before moving on to the next phase of the procurement procedure, the PR is usually approved by the appropriate department or budget holder.

What is a Purchase Order (PO)?

An official, legally binding document sent to the seller or supplier by the customer (often the purchasing department) is called a purchase order (PO). It contains the following information:

  • The quantity and item description are the same as in the PR, but they are more detailed.
  • Price: The total cost of each item plus any reductions that may have been negotiated.
  • Delivery Instructions: The time and location of the item’s delivery.
  • Terms and Conditions: Conditions of payment, warranty, return guidelines, and other aspects of the contract.
  • Terms of Shipping: Insurance, shipping costs, and delivery method.
  • A contract is created and the procurement procedure commences after the supplier accepts the purchase order.

Automatic Purchase Requisition (PR) to Purchase Order (PO) Conversion is a streamlined process in SAP that helps automate the procurement cycle, reducing manual effort and speeding up the ordering process.

This automation is particularly beneficial for high-volume procurement environments, where efficiency and accuracy are critical.

Prerequisites for PR to PO Creation

1) Automatic PO indicator should be on in Material master.
2) Automatic purchase indicator should be on in BP.
3) Info record and source list to be maintained.
4) In purchase requisition source of supply should be maintained.

Step 1 – Setting the Automatic PO Indicator in Material Master for PR to PO Creation

One important aspect that can increase efficiency and streamline operations in the procurement process is the automatic generation of Purchase Orders (PO) from Purchase Requisitions (PR). Activating the Automatic PO Indicator in the Material Master of SAP or any other ERP system is one method to guarantee that the PO is generated automatically upon the creation of a Purchase Requisition (PR).

When a purchase requisition (PR) is prepared, the Material Master’s Automatic PO Indicator determines whether a PO will be generated automatically for a material. This configuration can improve procurement efficiency, save time, and lower manual errors.

1.Use SAP (or ERP System) to access Material Master Data

  • Open your ERP system (e.g., SAP).
  • Navigate to the Material Master view, which stores all the details related to a specific material.

In SAP, you would typically follow the transaction code MM02 to modify the Material Master or MM01 to create a new material master record.

2. Locate the Material Record

  • Enter the material number for which you want to set the automatic PO indicator.
  • Select the appropriate organizational levels (e.g., plant, storage location) depending on the scope of the material.

3. Go to the Purchasing View

Once you’ve accessed the material’s record:

  • Navigate to the Purchasing view (you may need to scroll through the tabs or select the relevant section, depending on the version of the ERP system you are using).In SAP, this section usually contains the purchasing-related settings, including vendor information, procurement type, and other purchase-specific details.

4. Set the Procurement Type

  • Check the Procurement Type field. Ensure that the material is set for External Procurement (E) if you intend to automatically create POs for it. This field indicates whether the material is procured externally (from vendors) or produced internally.If you set the material to ‘F’ for In-house Production, no automatic PO will be created.

5. Activate the Automatic PO Indicator

  • Look for the field Automatic PO Indicator (often labeled Automatic Purchase Order or Auto PO) within the Purchasing view.
    • In SAP, this is typically a checkbox that, when checked, enables automatic purchase order creation from a PR.
  • Check this box to enable automatic PO creation.

6. Save the Changes

  • Once the Automatic PO Indicator is checked and other relevant data is validated, click on the Save button to store the changes.

7. Verify the Configuration

To ensure that the configuration is correct:

  • Create a Purchase Requisition (PR) for the material in question, and ensure the system automatically creates a Purchase Order (PO) once the PR is processed.You can verify this in the Purchase Order or Purchase Requisition transaction in SAP (such as ME51N for PR and ME21N for PO).

Step 2 – Setting the Automatic Purchase Indicator on in Business Partner in SAP (or other ERP Systems)

In SAP and other ERP systems, the Business Partner (BP) is a key entity in the system that represents both suppliers and customers. The Automatic Purchase Indicator in the Business Partner record plays a significant role in the procurement process, allowing the system to automatically handle purchasing transactions, such as the creation of purchase orders (POs) or purchase requisitions (PRs) when certain conditions are met.

This article will guide you through the steps required to set the Automatic Purchase Indicator in the Business Partner record, along with an explanation of its functionality and benefits.

1. What is the Automatic Purchase Indicator in Business Partner?

The Automatic Purchase Indicator is a setting within the Business Partner master data in SAP. When enabled, this indicator allows the system to automatically trigger purchase orders or purchase requisitions for procurement processes related to that business partner, typically a vendor (supplier).

This setting is particularly useful in scenarios where regular purchases are made from a particular supplier. Enabling this indicator saves time by automating purchase order creation based on purchase requisitions, reducing the need for manual intervention.

2. Steps to Set the Automatic Purchase Indicator in the Business Partner

Follow these steps to enable the Automatic Purchase Indicator in the Business Partner master data within SAP (or other ERP systems that support similar configurations):

Step 1: Access the Business Partner Master Data

  1. Open your SAP system and enter transaction code BP in the command field to access the Business Partner master data.
  2. Alternatively, navigate through the SAP menu to Logistics → Logistics Execution → Master Data → Business Partners.

Step 2: Locate the Relevant Business Partner

  • In the Business Partner screen, search for the relevant vendor (supplier) or create a new Business Partner entry if one does not exist.
  • Enter the Business Partner number or use the search options to find the specific vendor record.

If you’re creating a new Business Partner, you can do so by following the steps in the Create Business Partner screen.

Step 3: Open the Purchasing View

Once you’ve selected the correct Business Partner, perform the following steps:

  1. Click on the Change button to modify the Business Partner record.
  2. Navigate to the Purchasing view. The Purchasing view contains all the settings related to purchasing activities, such as procurement, purchasing organization, and supplier data.In some systems, this may be referred to as the Vendor Data section or Supplier tab.

Step 4: Enable the Automatic Purchase Indicator

  1. In the Purchasing view, locate the field labeled Automatic Purchase Indicator or Auto PO Indicator. This field may be in a section dedicated to procurement or under a specific tab related to Vendor Data.
  2. Check the checkbox or enable the option for Automatic Purchase or Auto PO.
    • Auto PO Indicator (Automatic Purchase): When checked, the system automatically creates purchase orders (POs) or purchase requisitions (PRs) for this Business Partner, depending on the procurement conditions set in the system.
    • The indicator allows automatic processing based on conditions such as material availability, minimum order quantities, and scheduled delivery times.

Step 5: Save the Business Partner Record

  • After selecting the Automatic Purchase Indicator, click Save to store the changes in the Business Partner master data.

3. Verifying the Automatic Purchase Indicator

Once the Automatic Purchase Indicator is set, it’s essential to verify that it functions correctly:

  1. Create a Purchase Requisition (PR) for the material and check if the system automatically generates a Purchase Order (PO) for the selected vendor (Business Partner) as soon as the PR is approved.
  2. Review the generated PO or PR to confirm that the vendor associated with the Automatic Purchase Indicator is correctly linked.
  3. Ensure that the system adheres to the configured conditions, such as pricing, delivery schedules, and quantity requirements.

Step 3 – Creating an Info Record for PR to PO Creation

An Info Record in SAP (or any other ERP system) is a crucial piece of data that links a vendor to a specific material or service. It helps define the terms and conditions for procurement, including pricing, delivery times, and payment terms. The Info Record is a vital element when converting a Purchase Requisition (PR) into a Purchase Order (PO), as it automates the process by storing essential details for the procurement cycle.

This article will guide you through the steps to create an Info Record in SAP, specifically to support the PR to PO creation process.

1. What is an Info Record?

An Info Record in SAP is a data record that contains information about the relationship between a vendor and a material or service. It provides the system with critical information that ensures the procurement process runs smoothly.

The Info Record can contain the following data:

  • Vendor Information: Name, address, and contact details.
  • Material Information: Material number, description, and specifications.
  • Pricing Conditions: Purchase price, discounts, and taxes.
  • Delivery and Payment Terms: Lead time, delivery terms, and payment conditions.
  • Quantity and Units of Measure: Minimum order quantities and packaging units.

When a Purchase Requisition (PR) is created, the Info Record enables automatic PO generation, allowing for faster and more efficient purchasing operations.

2. Steps to Create an Info Record for PR to PO Creation

Follow the steps below to create an Info Record for PR to PO creation in SAP:

Step 1: Access the Create Info Record Screen

  1. Open the SAP system.
  2. Enter the transaction code ME11 in the command field. This will take you to the screen where you can create an Info Record.
    • Alternatively, you can navigate through the SAP menu: Logistics → Materials Management → Purchasing → Info Record → Create.

Step 2: Enter Vendor and Material Details

On the Create Info Record screen:

  1. Vendor: Enter the vendor number or select the vendor using the search option.
    • The vendor should already exist in the Business Partner Master Data or Vendor Master.
  2. Material: Enter the material number for which the Info Record is being created.
    • The material should already be available in the Material Master.
  3. Plant: Specify the plant where the material will be procured.
    • You can either enter a plant directly or leave it blank to apply the record across multiple plants.

Step 3: Choose the Info Record Type

In the Info Record screen, there are several types of Info Records that can be created, such as:

  • Standard Info Record: For standard procurement from a vendor.
  • Subcontracting Info Record: For subcontracting materials (if applicable).
  • Consignment Info Record: If materials are procured on a consignment basis.

For most standard purchases, select the Standard Info Record type.

Step 4: Enter Vendor-Specific Data

  1. Purchasing Organization: Enter the purchasing organization relevant to this procurement.
  2. Pricing Conditions: You can enter or check the vendor-specific pricing conditions (price, discounts, and taxes) for the material.
    • For example, you can enter the agreed price for the material, unit of measure, or any specific pricing agreements with the vendor.
  3. Validity Period: Specify the validity period for the pricing conditions (start and end dates).
  4. Delivery and Payment Terms: Enter any specific terms related to the delivery, such as lead time and delivery conditions.
    • You may also define the payment terms, which will be used when creating a PO.
  5. Minimum Order Quantity (MOQ): Specify the minimum order quantity for this vendor-material combination, if applicable.
  6. Price Control and Discounts: If applicable, add any price control information or specific discounts that apply to the vendor for this material.

Step 5: Additional Data (Optional)

You can also enter additional details, depending on your requirements, such as:

  • Text Information: For additional notes or remarks about the material or vendor.
  • Order Unit: Specify the unit in which the material will be ordered, if different from the base unit.
  • Lead Time: Specify any lead times required for delivery or special conditions.

Step 6: Save the Info Record

After entering all the required details for the Info Record, click the Save button to store the data.

  • The Info Record will now be available in the system and can be used in future Purchase Requisitions (PR) to automatically generate Purchase Orders (PO).
  • The vendor and material information will be linked, ensuring that the relevant procurement terms are applied when creating POs.

3. How Info Records Support the PR to PO Creation Process

Once the Info Record is created, it plays a key role in the PR to PO creation process:

  1. Automatic PO Creation: When a Purchase Requisition (PR) is created in SAP for a material and a valid Info Record exists for the corresponding vendor, the system can automatically create a Purchase Order (PO).
  2. Pricing and Terms Inheritance: The PO generated from the PR will inherit the pricing conditions, payment terms, delivery schedules, and other relevant conditions from the Info Record, ensuring that the procurement process follows the agreed terms with the vendor.
  3. Consistency and Accuracy: The Info Record ensures that the correct vendor information and procurement terms are applied consistently across all purchase transactions for the material.
  4. Efficient Procurement: The automation of the PR to PO process with Info Records reduces the need for manual intervention, speeds up the procurement cycle, and minimizes errors, such as incorrect pricing or terms.

4. Verifying the Info Record

After creating the Info Record, it’s essential to verify that it has been set up correctly:

  1. Check Info Record for Vendor and Material: Use transaction ME13 in SAP to display the Info Record and verify the details such as pricing, delivery terms, and material specifications.
  2. Create a PR: Create a Purchase Requisition (PR) for the material in the relevant plant and vendor combination. Check that the system uses the Info Record’s details when generating the PR.
  3. Convert PR to PO: Once the PR is approved, convert it to a PO and verify that the correct information (vendor, pricing, delivery terms) from the Info Record is automatically populated.

Step 4 – Maintaining the Source List for PR to PO Creation in SAP

In SAP, the Source List is a crucial part of the procurement process, particularly when converting a Purchase Requisition (PR) to a Purchase Order (PO). The Source List specifies the approved suppliers or vendors for a material in a given period and helps determine which vendors can be selected when processing PRs and creating POs.

By maintaining the Source List properly, organizations can streamline their procurement processes, ensure compliance with vendor agreements, and ensure that POs are created with the appropriate suppliers.

1. What is a Source List?

A Source List is a procurement-related tool that links materials to approved vendors (suppliers) for a specific plant and timeframe. It helps determine which vendors can be selected during the creation of purchase requisitions (PRs) or purchase orders (POs). The Source List plays a key role in:

  • Restricting the selection of vendors during PO creation.
  • Managing approved vendors for materials over specific periods.
  • Automatically populating vendor details when converting a PR into a PO.

    2. Steps to Maintain a Source List for PR to PO Creation

    Follow these steps to maintain the Source List in SAP:

    Step 1: Access the Source List Maintenance Screen

    1. Open the SAP system.
    2. Enter transaction code ME01 in the command field to access the Source List maintenance screen.
      • Alternatively, navigate through the SAP menu: Logistics → Materials Management → Purchasing → Master Data → Source List → Maintain.

    Step 2: Enter Material and Plant Information

    On the Source List maintenance screen:

    1. Material: Enter the material number for which you want to maintain the source list.
    2. Plant: Enter the plant associated with the material for which you are maintaining the source list.
      • If the material is used across multiple plants, you can create source list entries for each plant separately.
    3. Click on Enter to move to the next screen.

    Step 3: Add Vendor Information to the Source List

    1. In the Source List screen, you will see a table where you can add vendors for the material.
    2. Vendor: Enter the vendor number for the supplier who should be listed as a valid source for the material.
      • The vendor must already exist in the Vendor Master Data (which includes the Business Partner record).
    3. Valid From/To: Specify the start and end dates during which the vendor is an approved source for the material. This allows you to manage vendor relationships over time, including seasonal suppliers or contracts.
      • This date range helps ensure that POs are only created with valid vendors during a specific period.
    4. Fixed Vendor (Optional): If this vendor is the sole supplier for the material, mark it as Fixed Vendor. When the Source List is used in a PR or PO, SAP will automatically assign this fixed vendor.
    5. Procurement Type: You can specify the Procurement Type as either External Procurement (E) or In-house Production (F). For the purposes of PR to PO creation, this is usually set to E (external procurement), especially when dealing with vendors.

    Step 4: Additional Fields (Optional)

    Depending on your business requirements, you may also need to maintain additional fields:

    • Source List Type: This field indicates whether the source list is for an internal or external procurement process. In most cases, this will be set to External for external vendor selection.
    • Order Source: In some cases, you may need to specify the order type, such as Standard PO or Contract.

    Step 5: Save the Source List

    Once you’ve added the appropriate vendors and their valid periods for the material, click Save to store the changes in the system.

    • The Source List entry will now be available for the material and can be referenced when creating PRs and converting them into POs.

    3. How the Source List Affects PR to PO Creation

    The Source List directly impacts the PR to PO conversion process by determining which vendors can be selected for a specific material. Here’s how it works:

    a. PR Creation:

    • When creating a Purchase Requisition (PR) in SAP, the system checks the Source List for the material and automatically proposes the approved vendors based on the existing source list.
    • If a vendor is marked as fixed, the system will automatically populate this vendor in the PR.
    • If no vendor is specified in the Source List or if multiple vendors are listed, the buyer or procurement specialist will need to manually select a vendor when converting the PR into a PO.

    b. PO Creation:

    • When converting a PR to a Purchase Order (PO), SAP will reference the Source List for the relevant material and plant.
    • If there is a valid vendor in the Source List, the PO will automatically suggest that vendor for selection.
    • If the Source List is marked with a fixed vendor, the system will automatically create the PO with this fixed vendor.
    • If multiple vendors are available, the user may select the vendor based on pricing or availability.

    c. Purchase Order Flow:

    • The Source List ensures that procurement is conducted with approved vendors, helping organizations adhere to supplier agreements and contracts.
    • This reduces the likelihood of errors in vendor selection and ensures compliance with purchasing policies.

    Step 5 – Create Purchase Requisition

    Follow these steps to create a Purchase Requisition (PR) in SAP:

    Step 1: Access the Create Purchase Requisition Screen

    1. Open the SAP system.
    2. In the command field, enter the transaction code ME51N (or alternatively, use the SAP menu: Logistics → Materials Management → Purchasing → Purchase Requisition → Create).

    Step 2: Enter the PR Header Information

    On the Create Purchase Requisition screen:

    1. Document Type: Select the appropriate document type for your purchase requisition. This determines the type of PR (e.g., standard, consignment, stock, etc.). The most common type is “NB” (Standard Purchase Requisition).
    2. Plant: Enter the plant where the material will be required. This is the location where the material will be received.
    3. Purchasing Organization: Enter the purchasing organization that will handle the procurement. This is typically managed centrally in the system.
    4. Requested Delivery Date: Enter the date by which the materials or services are required.
    5. Material Group (optional): If applicable, enter the material group that classifies the materials.

    Step 3: Enter the PR Item Information

    1. Material Number: Enter the material number for which the PR is being created. You can use the search functionality (F4) to find the material if you don’t know the number.
      • If the material does not yet exist, you may need to create it in the Material Master (with proper approval) before you can add it to the PR.
    2. Quantity: Enter the quantity of the material required.
    3. Unit of Measure: Ensure that the unit of measure (e.g., pieces, kilograms) is automatically populated from the Material Master. If not, manually enter it.
    4. Plant and Storage Location: If these are not already populated, enter the plant and storage location where the material will be stored once it is received.
    5. Delivery Date: Enter the required delivery date for each item (if different from the header).
    6. Account Assignment (optional): Depending on your organization’s requirements, you may need to assign an account to the PR item. You can select options such as Cost Center, Internal Order, or WBS Element to specify how the purchase will be charged.

    Step 4: Add Additional Items (If Needed)

    If you are requesting multiple materials or services in the same PR, you can add additional items:

    1. Click the Item Overview tab to add more items.
    2. Enter each item’s material number, quantity, unit of measure, and other details as required.

    Step 5: Check for Source of Supply (Optional)

    If you already have a Source List or Info Record set up for the material, SAP may automatically propose a vendor for the PR. You can check the Source of Supply tab to see if a vendor has been suggested.

    If a vendor is already linked to the material, the PR will reflect that information. Otherwise, the vendor can be manually entered or left for procurement to handle.

    Step 6: Add Text Information (Optional)

    You can add additional notes to the PR by using the Item Text or Header Text options. This is useful for clarifying special instructions or requirements for the items being purchased.

    • Item Text: For item-specific instructions.
    • Header Text: For PR-wide notes or instructions.

    Step 7: Save the Purchase Requisition

    Once all the information is entered and reviewed:

    1. Click the Save button to create the Purchase Requisition (PR).
    2. SAP will assign a unique PR number to the requisition.

    Step 6 – Converting Purchase Requisition (PR) to Purchase Order (PO)

    Once the Purchase Requisition (PR) is created and approved, the next step in the procurement process is to convert the PR into a Purchase Order (PO). The Purchase Order (PO) is the formal document sent to the vendor to confirm the purchase of the requested materials or services.

    This article outlines the process for converting a Purchase Requisition (PR) into a Purchase Order (PO) in SAP.

    1. Overview of PR to PO Conversion

    The process of converting a Purchase Requisition (PR) to a Purchase Order (PO) is a crucial step in the procurement cycle. A PR contains the request for materials or services, but it is the PO that officially orders the goods or services from a vendor. This conversion ensures that procurement can be tracked, monitored, and executed according to the agreed-upon terms and conditions with the vendor.

    The PO will contain all the details necessary to procure the material from the selected vendor, including:

    • Vendor information.
    • Material details (such as quantity, delivery date, price).
    • Payment terms, delivery conditions, and other terms.

    The conversion process is relatively straightforward in SAP, and it can be done manually or automatically depending on system configuration.

    2. Steps to Convert a Purchase Requisition (PR) to Purchase Order (PO) in SAP

    Step 1: Access the PO Creation Screen

    1. Open SAP and enter transaction code ME21N to navigate to the Create Purchase Order (PO) screen.
      • Alternatively, you can access the menu path: Logistics → Materials Management → Purchasing → Purchase Order → Create.

    Step 2: Enter the Purchase Requisition Information

    Once you are on the Create Purchase Order screen:

    1. Select the “PR” option: In the initial screen, you have the option to create a PO based on a Purchase Requisition. Choose the option to Create PO from PR.
    2. Enter PR Number: In the “Purchase Requisition” field, enter the PR number that you want to convert into a PO. You can also search for the PR number if you’re unsure.
    3. Plant: Make sure the correct plant is entered, as this should match the PR’s plant information.
    4. Document Type: Select the appropriate document type for the PO. Usually, this is “Standard PO” (NB) unless your organization has different types based on requirements.

    Step 3: Copy Purchase Requisition Items

    1. Copy from PR: After entering the PR number, press the Enter key. SAP will automatically pull the items from the selected PR, including material numbers, quantities, and other relevant data, into the PO.
    2. Review Items: The system will display the list of items requested in the PR. The following information will be populated:
      • Material number
      • Quantity
      • Delivery date
      • Plant and storage location
      • Account assignment (if applicable)
      • Verify the items: Review each item to make sure the quantity, material, and delivery date are correct. You can make any necessary adjustments here if required.

    Step 4: Vendor Selection (Optional)

    • If the PR was linked to a vendor through a Source List or Info Record, the vendor information will be automatically populated in the PO.
    • If no vendor is proposed or if you wish to change the vendor, you can manually enter the vendor number in the Vendor field or search for the vendor using the search functionality (F4).

    Step 5: Adjust PO Details (Optional)

    1. Pricing Information: Verify that the pricing information is correct. The price can be pulled from an Info Record, contract, or manually entered. If the price is incorrect or needs to be updated, you can adjust it here.
    2. Delivery Terms and Conditions: Ensure that delivery terms, payment terms, and other conditions are correctly copied over. If any changes are needed, modify the corresponding fields.
    3. Account Assignment (if applicable): If the PR requires an account assignment (e.g., cost center, internal order, or WBS element), ensure that it is copied correctly. Modify if necessary.
    4. Text Information: Add any necessary text (e.g., Item Text or Header Text) for the vendor regarding special instructions or details for the PO.

    Step 6: Review the PO

    Before saving the PO, review the following details:

    • Material Details: Ensure all material details such as quantity, description, and unit of measure are correct.
    • Vendor Information: Verify that the correct vendor and their details are populated in the PO.
    • Delivery Date: Make sure the delivery date corresponds to the required date as per the PR.
    • Pricing: Ensure the price reflects the agreed amount with the vendor, based on the Info Record or contract.
    • Account Assignment: Confirm that the account assignment information is correct (e.g., cost center, internal order).

    Step 7: Save the Purchase Order

    Once you have reviewed all the information, click Save to create the Purchase Order. The system will assign a unique PO number to the order, and the PO will be saved in the SAP system.

    • The PO number is now the official document used for procurement, and it will be sent to the vendor to initiate the purchase process.

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