Defining Purchase Orders

Once a purchase requisition has been approved, it generates one or more purchase orders that get sent to the supplier or suppliers.

A purchase requisition (PR) is an approvable document that is created when you submit a request to purchase items. Each PR has a unique ID (such as PR3248) to identify it as it moves through the purchasing process.

Purchase requisitions are the first step in transactional procurement:

1. A user requests products or services by completing a PR and submitting it for approval.
2. The PR is routed to everyone identified in the approval flow based on preconfigured business rules.
3. Approvers approve or deny the PR. If it is fully approved, one or more purchase orders (POs) are created for each supplier. If the PR is denied, the user can withdraw it or edit it and resubmit it for approval.
4. Suppliers receive the PO, optionally send an order confirmation, and ship the ordered products or provide the ordered services.
5. You receive the items and submit receipts as the items arrive. If the items arrive in batches, the purchase order remains open until all items have been received.

A purchase requisition or PR is an approvable document created by a user that represents a request for products or services from one or more suppliers.

Once approved, PR's are used to generate one or more purchase orders. A purchase order or PO is a legal document created by the system that represents a proposed agreement for the supply of goods or services that get sent to each supplier, after a PR is fully approved.

APO is never edited directly. Instead, change or cancel orders are created from the initial PR and once approved are sent to the supplier.

Although a purchase requisition typically generates one purchase order that gets sent to one supplier, a requisition with multiple line items may be split by SAP Ariba into multiple POs based on the details.

Catalog and non-catalog items may be split into separate POs to streamline the fulfillment process.

Line items from different ship to locations may be split into multiple POs, one for each ship to location.

Items that are associated with different contracts will be split, one per each contract.

Piccard items may be split into different Pos than standard settlement items and items with different account codes may also be split into separate POs.

After a requisition is fully approved, the SAP Ariba system orders each line item on it based on the configuration. Usually, a given requisition yields only one purchase order, but a requisition might generate several purchase orders. One common reason that a requisition is split into multiple POs is that different line items come from different suppliers. A requisition might also be split into several POs for the following reasons:

• Items of different types: catalog vs. non-catalog items. This splitting is performed because suppliers typically process orders for catalog items differently than non-catalog items
• Items with different delivery (Ship To) locations. This is controlled on a supplier-by-supplier basis. Some suppliers cannot handle POs that contain items to be shipped to multiple, different locations
• Items tied to different contracts (which become separate release orders against the respective contracts)
• Items bought through P-Cards vs. items paid for using invoice settlement
• Items with different accounting codes (P-Card POs only)

It is possible to have the SAP Ariba system split requisition line items based on other factors, but these must be performed through customization.

The most common reason PR's are split into multiple POs is because they contain items from different suppliers. Once fully approved the PR will generate POs for each supplier.

In this example, purchase requisition PR100 containing three line items is split into two separate purchase orders, because it contains items from two different suppliers. Each supplier will be issued its own PO.

Purchase orders are sent to suppliers based on the ordering methods configured in SAP Ariba. The Ariba network is used to send POs directly to suppliers.

The export order to ERP method sends the PO to your ERP, which then transmits it to the supplier.

The copy order to ERP method uses the Ariba network to send POs to the supplier, but also sends a copy to the ERP system.

For suppliers with unique circumstances and order may need to be delivered manually. A combination of these ordering methods can be used to accommodate many different types of suppliers simultaneously.

SAP Ariba offers a variety of channels for sending purchase orders to suppliers. In a typical configuration the system supports several alternatives, depending on your ERP systems, your suppliers, and the kinds of items users are ordering.

• Transmit Order through Ariba Network
• Export Order to ERP
  • PO is transmitted to ERP, which then dispatches it to the supplier
• Copy Order to ERP
  • PO is transmitted to supplier via Ariba Network and a copy is also sent to the ERP
• Dispatch Order Manually
  • PO is manually sent to the supplier (typically by clicking Print on the PO, saving as PDF, and emailing) and the user marks the PO as "Ordered"
• Combinations of the above

In order to streamline the process of getting suppliers on board, the Ariba network, a standard account can be provided to suppliers, allowing limited access to transactions and functionality.

Suppliers can use this free standard account to get started with SAP Ariba and to transmit basic documents.

• Account type: Ariba Network
  • AN account with fewer options than Enterprise Account (formerly Full Account)
  • Free for supplier fulfilment fees
• Sign-up and process from Interactive Emails
• Supports all basic documents such as OC, ASN, Service Entry Sheets, non-PO invoices, credit notes, etc.
• Including e-invoicing for AN supported countries in LATAM
• Provides access to Discovery, Supplier Lifecycle Performance, Sourcing and Contracts
• Supplier Mobile App supported

POs that cannot be processed using the automatic ordering methods. We need to be processed manually. Searching for POs with the status ordering will show you those orders that may need manual intervention.

To manually process a PO, open up in ordering status and click the print button at the top of the page.

Print or save the PO and manually send it to the supplier by email, fax in person or by other means.

One important consideration when your organization will be processing some orders manually is the PO status. If users forget to click Mark Ordered when processing the PO, it can quickly become difficult to determine which POs have been sent and which still require processing.

• Purchase Orders not being transmitted automatically to suppliers will have to be processed manually
• You can search for Orders which may need to be processed by accessing Purchase Orders from the Manage menu
• Filter for Order Status "Ordering"
• Select an order, click the Print button, and then:
  • Save the result as a PDF and email it to the supplier
  • Print it and mail or fax the result to the supplier
  • Process the order in some other fashion
  • Once you have processed the order, click the Mark Ordered button

Once you have manually delivered the purchase order to the supplier, click the mark ordered button in the PO to update the order status.

In the comments, it's recommended to provide information about how and when the PO was sent to the supplier.

Clicking the mark ordered Button will update the order status from ordering to ordered, allowing the PP to be further processed. Clicking the mark ordered Button will not attempt to retransmit the document over the Ariba network.

Clicking the Print button will pop up a new window with a printable version of the order for transmission to your supplier. Often, it makes sense to save this as a PDF file.

Once the order has been sent to the supplier, click Mark Ordered to update the order status from Ordering to Ordered. SAP Ariba will allow you to enter comments: you may wish to leave a note as to the method of transmission (email, fax, mail?) and recipient.

Change orders can be submitted to modify or correct a PO that's already been sent to a supplier.

Change orders can be initiated by the requester or members of certain purchasing groups by clicking the change button in the requisition or the purchase order.

Clicking the change button opens a new version of the PR that was used to create the PO.

The new version of the PR will have a V and the new version number added to the ID.

Users can make changes to the quantity or other information in the new version of the PR and submit it for approval.

Once the PR is approved, SAP Ariba sends a new version of the PO with the changes to the suppliers.

A change order is a modification to a purchase order that has been sent to a supplier. Your administrator can allow or disallow change orders.

If your organization allows change orders, you can initiate them two ways:

• Change the requisition by clicking the Change button in the Requisition screen. This can be performed by the original requester or by users in specific purchasing-related groups (Purchasing/Procurement Manager and Purchasing/Procurement Agent).
• Change the purchase order by clicking the Change Order button on the Order tab of the Requisition screen or the Change button on the PO screen. (Only members of the Purchasing/Procurement Manager groups can perform the last action.)

Regardless of the way the change is initiated, when you change an order, you are actually changing the requisition from which the order originated. A new version of the requisition, designated by a version number such as V2, is created and submitted for approval. The changes display on the History tab. The new version of the purchase requisition goes through approval and, after it is fully approved, the SAP Ariba creates new versions of the associated POs and it sends them to the suppliers.

• Corrects or changes an order that has already been sent
• Modifies the underlying requisition that created the PO
• Change orders are allowed only if:
  • Change orders are allowed in your SAP Ariba Solution
  • The PO has a certain status
  • The supplier accepts change orders
  • Your ERP supports change orders (and ERP is involved in the ordering process)

• Change orders can be done by:
  • The original requester
  • Users in certain purchasing-related groups

Cancel orders can be submitted to request the cancellation of a PO that's already been sent to a supplier.

Cancel orders can be initiated by the requester or by members of certain purchasing groups by clicking the cancel button in the requisition or the purchase order.

Clicking the cancel button opens a new version of the PR that was used to create that PO with the line items deleted, the new version of the PR will have a V and the new version number added to the PR ID.

Users can choose which line items to include and which to cancel and submit it for approval. Once the PR is approved, SAP Ariba sends a new version of the PO with the cancellation to the suppliers.

A cancel order is a request to annul a purchase order that has been sent to a supplier.

You can initiate cancel orders two ways:

• By clicking the Cancel button on the Requisition View. This can be performed by the original requester or by users with certain purchasing related groups (Purchasing/Procurement Manager and Purchasing/Procurement Agent).
• By clicking the Cancel button on the Order tab of the Requisition screen or the Cancel button on the PO screen. Only members of the Purchasing/Procurement Manager groups can perform this action.

Regardless of the way the cancellation is initiated, when you cancel an order, you are actually changing the requisition from which the order originated. It creates a new version of the PR, designated by a version number such as V2, which has all the line items deleted and submits for approval. The changes are displayed on the History tab. During PR approval, the PO moves to Canceling state. After the PR is fully approved, the PO moves to Canceled state. Then, the order cancelation is communicated to the supplier.

• Cancellation of an order that has already been sent
• Modifies the underlying requisition that created the PO
  • Deletes all line items
• Cancel orders are allowed only if:
  • PO is in Ordered status
  • The supplier accepts cancel orders
  • Your ERP supports cancel orders (and ERP is involved in the ordering process)
• Cancel orders can be initiated by:
  • The original requester
  • Users in certain purchasing-related groups

If the original PO was sent via the Ariba network, change or cancel orders also get sent via the Ariba network as a new version of the PO. For ERP orders the change or cancel orders can be exported to the ERP.

Changes or cancellations should be initiated in SAP Ariba, not in the ERP.

If the original PO was routed through Ariba Network, SAP Ariba handles change or cancel order by sending a new version of the order (a changed or canceled one) to the same supplier. However, if the order is an ERP order, the details of the change and cancel order can be configured to be exported to the ERP system.

Users must initiate change and cancel orders in the SAP Ariba System, not in the ERP.

The process flow is:

1. After the changed or cancelled requisition is approved, a new PO version is generated, and the SAP Ariba system exports the changed or canceled PO to the ERP.
2. SAP Ariba system changes the PO status to Ordered (for change orders) or Canceled (for cancel orders).

• If order was originally sent to ERP, change/ cancel orders can be configured to be exported to the ERP
• Change/cancel orders are exported to ERP when integration event runs
• Users must change/cancel orders in SAP Ariba , not in the ERP

Purchase orders can be closed for further receiving for invoicing, for changes or for all activity. It may also be useful to close old POs that have been open with no activity to clean up the data for more accurate reports.

POs can be closed if no further activity is expected for them. A typical situation in which you are required to perform a "Close" order action is when a PO has had no activity for a period of time. Closing them allows the creation of more-accurate PO reports.

Other business cases for using the Close Order action are when you:

• Do not want to continue further receiving for a particular item (but can still process open invoices).
• Want to block items in a purchase order, thereby preventing any further receiving or invoicing against particular items in that purchase order.

(If POs were created by users who have left your organization, use delegation to assign those POs to other users; do not close them and open new ones.)

• Purchasing Administrators and Purchasing Managers can close POs
• POs can be closed for change, receiving, invoicing, or all
• Can automatically close POs that have had no activity for a period of time
• Closed POs can be reopened

For orders that have experienced transmission issues, the force order and force cancel commands can be used to push the statuses from ordering to ordered or from cancelling to cancelled.

These buttons can be used by purchasing managers when communications fail, but the buttons will not attempt to retransmit or send the order again. They will only update the status is so that the documents may be processed further.

The Force Order and Force Cancel commands are available for circumstances when purchase orders, change orders, or cancel orders are interrupted and have stalled in the SAP Ariba system or on Ariba Network. You must first search for the stalled order or payment transaction. You must manually communicate the purchase order, change order, or cancel order to the supplier. The Force Order and Force Cancel commands do not retransmit these orders; they only change their statuses in the SAP Ariba system.

These commands can be issued by users in the Purchasing Manager group only.

The Force Order command manually changes the status a purchase order or change order in SAP Ariba. The only orders that you can force order are those with a status of Ordering.

The Force Cancel command manually changes the status of cancel orders or payment transactions in SAP Ariba. This command changes the status of the order or payment transaction from Canceling to Canceled and allows the cancellation process to continue. The only orders and payments you can force cancel are those with a status of Canceling.

• Available for special circumstances where communication has failed or has been interrupted.
• Force Order
  • Interrupted electronic ordering process with no recovery
  • Only if order status is Ordering
• Force Cancel
  • Interrupted/failed communication of canceled PO
  • Status changes from Canceling to Cancel
• IMPORTANT: These actions change the status of the PO only within the SAP Ariba system; they do not retransmit the document.
• Use these commands only after manually communicating a purchase order, change order, or cancel order to the supplier.

For order sent via the Ariba network, there are three types of order updates that suppliers can send.

The Ariba network will send an order status update when it receives a PO, this typically only takes a few minutes at most and updates the PO status from ordering to ordered.

Suppliers can send order confirmations to verify the quantity or amounts of each line item that has been confirmed, confirmed with changes, back ordered, or rejected. Suppliers can send multiple order confirmation messages as needed.

Suppliers can also send one or more ship notices to acknowledge that line items have been shipped and can include additional shipping details. Suppliers can be required to send these order updates before invoicing.

After a PO is routed through Ariba Network, users can view the supplier’s current order fulfillment status in the SAP Ariba system. Ariba Network sends three types of status messages to the SAP Ariba system:

• Order Status: On receiving the order, Ariba Network (or a cXML-enabled or EDI-enabled supplier) sends an order status message, indicating that the order arrived intact.
• Order Confirmation: The supplier sends an order confirmation, which indicates that ordered line items are accepted, rejected, or backordered. Whenever there is a change to the quantity accepted, accepted with changes, backordered, rejected, or substituted, the supplier sends another order confirmation message.
• Ship Notice: When there is a change to the number of items shipped, the supplier sends a ship notice.

Suppliers can generate these messages automatically in their own systems (through cXML or EDI) or create them manually on Ariba Network.

Your administrator can configure Ariba Network to require suppliers to generate order confirmations or ship notices before they can send a invoices.

• Suppliers communicate PO status updates through Ariba Network
• Users see PO and line-item statuses
• Applies only to POs routed through Ariba Network
  • There is no way to manually enter supplier fulfillment status updates into the SAP Ariba system

Once a supplier receives a purchase order, they ship the items or provide the services and can optionally send order confirmations or ship notices to provide updates.

A purchase requisition (PR) is an approvable document that is created when you submit a request to purchase items. Each PR has a unique ID (such as PR3248) to identify it as it moves through the purchasing process.

Purchase requisitions are the first step in transactional procurement:

1. A user requests products or services by completing a PR and submitting it for approval.
2. The PR is routed to everyone identified in the approval flow based on preconfigured business rules.
3. Approvers approve or deny the PR. If it is fully approved, one or more purchase orders (POs) are created for each supplier. If the PR is denied, the user can withdraw it or edit it and resubmit it for approval.
4. Suppliers receive the PO, optionally send an order confirmation, and ship the ordered products or provide the ordered services.
5. You receive the items and submit receipts as the items arrive. If the items arrive in batches, the purchase order remains open until all items have been received.

Suppliers can send order status updates, order confirmations, and ship notices via the Ariba network, XAML or EDI.

Order status updates. Push the PO status from ordering to ordered.

Order confirmations for some, but not all of the items on a PO move the PO status from ordered to confirming.

Once order confirmations have been submitted for all items in a PO, the PO status moves to confirmed.

Ship notices for some, but not all, of the items on a PO will push the PO status from ordered to shipping.

Once ship notices have been submitted for all items in a PO, the status moves to shipped.

The table above lists the three order status cXML messages that suppliers can send. These messages are generated by the supplier (through cXML, EDI, or online in their Ariba Network accounts) and then routed to SAP Ariba.

After a message has been received by SAP Ariba, the status of the PO changes as described in the table. For example, when a supplier has created an order confirmation for a PO, the status of the PO advances from "Ordered" to "Confirmed" or "Confirming" (depending on whether all or only some of the line items have been confirmed).

Note that these statuses are PO statuses. The status of the requisition that created the PO remains as "Ordered."