Explaining Collective PO

As a result of replenishment, stock transport orders are generated which reflect the store demands for basic or further assortments (products like e.g. shoe polisher, perfume). These types of products can be externally purchased on a short-term basis, which does not require long pre-planning and pre-ordering phases.

The buyer automatically generates the collective purchase order, which consolidates the demands of stores or customers, and creates an external PO to the vendor.

It is possible to use the merchandise distribution functions to control the flow of merchandise from the vendor to the recipient (store or customer) if the recipients of the materials are known at the time of procurement. Either an allocation table (push method) or a collective purchase order (pull method) can be used to plan distribution. The goods are procured externally and usually flows through the distribution center. They can either be put away in the distribution center or moved through the distribution center using cross-docking or flow-through.

Using the push method, planning for merchandise distribution takes place using an allocation table. The procurement documents (vendor orders) and issue documents (warehouse orders or sales orders) are then generated as follow-on documents for the allocation table.

When the pull method is used, issue documents (sales orders or warehouse orders) for the recipients exist already. Collective purchase orders are created as procurement documents in which the issue document quantities for each material and distribution center are added together.

Collective purchase orders are used to plan merchandise distributions. You can use a collective purchase order to combine the requirements of recipients, that may exist in the system as warehouse orders or sales orders, to create a single order for a vendor ("pull" process). Distribution data for a collective purchase order is kept in the system and you can then use this to control and monitor the distribution of merchandise to recipients.

The transaction used to create collective purchase orders is WF10.

When creating a collective purchase order, it is possible to enter criteria so that schedule lines in issue documents are taken into consideration. Possible criteria are the distribution center, recipient, relevant time period and issue document type, for example. Of the selected materials, the system only takes those materials into consideration that have also been assigned the relevant processing method in the distribution profile of the material master. Existing warehouse stock and open purchase orders can thus be considered as merchandise that has already been procured.

The system uses the settings to select the relevant issue document items and their schedule lines, and groups their quantities for each material and distribution center into potential collective PO schedule lines. Potential collective PO items are then created using one or more collective PO schedule lines.

It is possible to process potential collective PO items individually in detail or using a worklist, and make changes as required. For example, this is the method by which you can assign supply sources or change the quantity of collective PO schedule lines.

The figure shows a screenshot of the screen in which the relevant settings for the generation run are made.

Collective purchase orders create a link between one procurement document (such as a vendor purchase order) and several issue documents (sales orders and warehouse orders). Collective orders can be processed:

Via worklist:

You use a worklist to generate collective purchase orders for each vendor.

Via individual items:

You generate the collective purchase orders immediately, i.e. all issue documents displayed in the screen are grouped in the one purchase order. Alternatively, you enter a collective purchase order item in the worklist for all the items on the screen, and then generate a collective purchase order item from the worklist.

The figure illustrates the phases of a Merchandise Distribution.

The merchandise distribution process is broken down into the planning/purchasing and the logistical processing phase:

1. Planning/purchasing for merchandise distribution is done centrally, either using an allocation table or a collective purchase order. Distribution data is updated during planning. This data forms the link between procurement and issue documents.

2. The processing of merchandise distribution takes place in the distribution center. The distribution data is adjusted to match the quantities actually available at goods receipt. The merchandise is then distributed to recipients using different processes or placed in storage, as required. Finally, the merchandise is moved to the goods issue zone where the goods issue is posted.

In subsequent logistical processing, various processing methods are used to distribute the goods to recipients or put them into stock. The stock is posted to a separate storage location for each processing method. In SAP there are the following processing methods available:

• Cross-Docking: Shipping units are not repacked between goods receipt and goods issue.
• Flow Through: After goods receipt, the goods are transported to a repacking bin where they are repacked. They are then transported to goods issue. There are two kinds of flow-through:
  • Recipient-driven
  • Material-driven
• Put away: Goods are posted to a put away storage location.