Preface – This post is part of the SAP SD series.
Table of Contents
In the previous articles, we have learnt about an inquiry with an example. So we have Wal-Mart as our customer. We have a company, say, HP. Wal-Mart has inquired for some goods and an inquiry has been created in the system and sent out to Wal-Mart. Wal-Mart liked the inquiry and requested a formal call. This is a quote or an RFQ. A quotation was created in the system with reference to the inquiry.
Up until this point, things are casual, meaning the customer is not promising to buy. The customer is just fooling around. Basically, it’s like you want to buy a car. You go to one dealer, another dealer, you go to five different dealers. You might just inquire for how long you want or you might get quotations from one, two, three, four different car sales guys or dealers. And you ultimately will end up buying from one. Typically, the quote that you like, you just confirm the quote and that’s when you go in and place an order for the car. But up until that point, it’s just called pre-sales term, because up until this point, there’s no sale.
But after this, if the customer chooses to buy, then the customer will place what is called a purchase order.
Steps to sales:
- Purchase order
So from this point on, it becomes a sale. It’s almost exactly similar in terms of the data that it contains between an inquiry and a quotation. The customer does not change, nor does the quantities or the products that are desktops, laptops. So you can as well create it with reference and copy all the products and customers over to your subsequent document. In this case, the document is a sales order. And save it and generate a number for you, say 13409, and that is what you’re going to send as a purchase order, confirmation to the customer, Wal-Mart.
A sales order is a document generated in the system by the seller containing all the details related to the products or services requested by the customer. The details include prices, quantities, terms and conditions and much more information.
A purchase order is a fancy word for an order number generator in the system that confirms to the buyer that they have received the order. It is a document that a customer sends to the supplier that includes details like quantities, prices.
It’s just like if you place an order at Amazon, you’ll get order confirmation. So here are the products you brought to get to know the prices, the total taxes and of course, you get additional details like when it’s going to ship by, and on what carrier, what tracking number and other information. That’s your purchase order number.
Difference between purchase order and sales order
When the customer is buying things, he’s actually purchasing things. Wal-Mart, the customer, calls it a purchase order. HP, on the other hand, is selling things. So it’s called the sales order, but both are the same in this case.
And another point, just like the way quotation number and an inquiry number is generated, a purchase number is generated and sent to the customer, and that is called an order confirmation or a purchase order confirmation or sometimes it’s called sales order confirmation.