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What are monetary impact of open overdue Purchase Orders (PO) on SAP?

Is there any costs savings/benefits on closing open and overdue PO's?

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1 Answer

  • Jun 06, 2017 at 08:14 AM

    re your subject line:

    the monetary impact of an open overdue purchase order is equal to an purchase order which is not overdue except you agreed with your vendor that you get a price reduction if the delivery date is not met.

    and since your question in the body is different from your subject line:

    A PO is a legal document, you agreed to take the delivery of the goods and your vendor agreed to deliver it to you.

    So just closing an overdue PO is technically possible but you herewith forget the business practice. You have to talk with your supplier, you may have to remind him, eventually accept a later delivery date or negotiate with him that you cancel the order.

    Never treat a PO totally isolated. You ordered the material/service because you needed it. This need is in general not gone if the vendor does not deliver on time. It even becomes more important as it may impact your own ability to sell goods or to manufacture material based on that missing delivery. So just closing it will not really give you any advantage, the next MRP run will again create a requisition and you will again create a PO, and if the buyer has a short memory then he may even order at the same vendor. Also ordering at a different vendor may not be faster than a late delivery from the original vendor.

    Of course closing old POs which have been partially delivered and where you don't expect any further delivery is always a good step and the benefit is certainly visible to the material planner, as open old POs don't just look ugly in his MD04 transaction they also may prevent MRP from ordering new material as it has to assume that this old POs still get delivered.

    And you also save a lot work for those guys who care about archiving in future, as these cases will all come up again in the archiving context and thinking now about a business case is much quicker and easier than thinking about a business case which was 3 years in the past.

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