You have created a purchase order of the document type "standard PO" with reference to a contract. The contract item you are referencing has the item category M (material unknown) or W (material group). This item category was adopted in the PO.
If the combination of document type "standard PO" and item category M or W has not been defined in Customizing for Purchasing, you must use a valid combination of item category and document type.
Check your input and change the item category if necessary.
If you wish to create a stock transport order (with item category U), you must invoke the function Purchase order -> Create -> Stock transfer or use the order type stock transport order.