Hi ,
Business Example
For some of the office supplies needed by your firm, you can simply phone your vendor to give notification of your requirements. The goods are then delivered directly to the individual offices, so that a confirmed
goods receipt does not have to be recorded in the system. To cover such transactions, you have created a blanket purchase order in the system.
You check each invoice you receive from the vendor against the limit and validity period of the blanket PO.
1. Lets say the BPO was created on Jan 1, and the requirement for procurement arises in March, June, October and December. In this case do we have to create a new PO with reference to BPO for each of these months?
Answer: there is no need to create the separate PO for each month. the use of framework order and item category B open the value limits and validity period. give the validity period as per your requirement and the value.
thru BPO you instruct the vendor before hand in this particular period you are going to buy these specific material of total amount assigned. you can call him and inform that you require that material, it is helpful in those cases.
2. If not, do we have to modify the BPO that was originally created?
Answer: if the material are not covered what you have agreed with him may be yes.
3.How does vendor receive our requirement for materials?
Answer: you can make a call or send a intimation about this.
4.Can we use ERS in this case for automatically generating invoices
Answer : yes you can.
I am writing below the complete process of BPO, this will clear your doubts.
The use of blanket purchase orders enables you to simplify the procurement process for low-value consumables and thus reduce costs
Advantages of Blanket POs
With certain procurement transactions, the costs of procurement are disproportionately high in relation to the value of the material or service involved. This is frequently the casewith office supplies (such as pencils
and notepads) and services of relatively minor importance (such as small repairs, cleaning work, and courier services), for example.
Procurement costs - which in the case of standard procurement processes can be quite high - are significantly reduced if a so-called blanket purchase order is created instead of a standard PO. Such a single long-term purchase order can be used to procure a variety of materials or services whose
modest value does not justify the high processing cost of issuing a series of individual POs.
The main advantage of using blanket POs is thus the associated reduction in order processing costs. Transaction costs are lower with blanket POs because:
• The blanket PO is valid for a longer period.
• There is no goods receipt or service entry.
• It is not necessary to create PO items for individual procurement transaction