Master the process of vendor returns using Return Purchase Orders in SAP MM. Learn detailed steps for all return scenarios, movement types, configuration tips, and accounting impact.
Introduction
In the world of supply chain and procurement, vendor returns are inevitable. Whether due to damaged goods, wrong deliveries, or excess stock, returning materials to the vendor is a core part of inventory management.
SAP MM (Materials Management) provides a robust framework to handle these scenarios using Return Purchase Orders (Return POs). This guide covers every aspect of Return POs—from process flows to configuration, movement types, and integration with finance.
What is a Return Purchase Order in SAP MM?
A Return Purchase Order is a purchasing document created to return materials to a vendor. It ensures the returned quantity is documented properly, inventory is updated, and related financial postings are accurate.
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SAP MM supports three types of vendor return processes:
| Return Type | Use Case |
|---|---|
| Return Without Return PO | When referencing the original PO; no separate return PO is created. |
| Return With Return PO | When no reference PO or better control is required. |
| Return With Return PO & Outbound Delivery | Used in logistics-heavy setups where outbound delivery is essential. |
Scenario 1: Return Without Return PO
When to Use
- Material was received with a valid PO.
- You want to return goods directly using that PO reference.
- No need to create a new Return PO.
Process Steps
- Open Transaction Code MIGO.
- Select Goods Receipt against PO.
- Enter the original PO number.
- Use Movement Type 122 (for valuated return).
- If the material was posted to GR blocked stock with movement type 103, use movement type 124.
Important Notes
- This method updates the PO history.
- The returned quantity becomes open quantity in the PO.
- Accounting postings are generated:
- GR/IR account debited
- Stock account credited
Scenario 2: Return With Return Purchase Order
When to Use
- Original PO reference is unavailable.
- The organization requires better tracking and traceability.
- Handling returns from multiple POs of the same vendor.
Process Steps
- Create Return PO via Transaction ME21N:
- Use document type
NB(standard). - Select the Returns Item checkbox at item level.
- Use document type
- Post Goods Issue in MIGO using Movement Type 161.
- Post Credit Memo in MIRO with reference to the Return PO.
Notes
- This process generates a separate return PO number for auditing.
- Ideal for batch returns and consolidated reporting.
- Accounting entries:
- Stock G/L account credited
- GR/IR account debited (during return posting)
- Vendor account debited (during credit memo)
Scenario 3: Return With Return PO and Outbound Delivery
When to Use
- You operate in a warehouse/logistics environment.
- Physical goods must be picked, packed, and shipped back.
Process Steps
- Create Return PO in ME21N.
- Create Outbound Delivery using VL10B (based on Return PO).
- Perform picking and packing.
- Post Goods Issue via VL02N with Movement Type 161.
- Post Credit Memo in MIRO against the Return PO.
Configuration Requirements
- Define return delivery type (usually
RL) in the purchasing config path. - In the Vendor Master under Purchasing Data, check the Returns Vendor box.
Return Movement Types in SAP MM
| Movement Type | Purpose |
|---|---|
| 122 | Return to vendor after GR (valuated) |
| 124 | Return from GR blocked stock (non-valuated) |
| 161 | Goods issue with Return PO |
Accounting Entries for Vendor Returns
| Step | Debit | Credit |
|---|---|---|
| Return (122/161) | GR/IR Account | Stock G/L Account |
| Credit Memo (MIRO) | Vendor Account | GR/IR Account |
If the invoice is already posted, make sure GR reversal is allowed in configuration using Transaction OMBZ.
Configuration Overview
| Config Element | Path / Transaction |
|---|---|
| Return Delivery Type | IMG → MM → Purchasing → Returns to Vendor |
| Vendor Master Setup | Vendor → Purchasing Data → Returns Vendor |
| Reversal Settings | Transaction OMBZ |
Best Practices
- Always match movement types with the stock situation (e.g., 124 for blocked stock).
- Ensure vendors are set up as Returns Vendors if using outbound delivery.
- Post credit memos promptly to avoid open liabilities in GR/IR clearing.
- Use Return POs for improved traceability in audit-heavy environments.
- In S/4HANA systems, consider implementing Advanced Returns Management (ARM) for automated workflows.
Conclusion
Handling vendor returns in SAP MM is a structured process involving movement types, document flows, and configuration. By understanding the Return Purchase Order process in detail, businesses can improve inventory accuracy, streamline audits, and maintain proper financial compliance.
Whether you’re using ECC or S/4HANA, leveraging the right return process—simple or outbound-based—ensures better vendor relationships and internal control.