Functional Documentation/Procurement Management

Introduction

Procurement Management entitles the activity of handling and request of required goods to the moment of arrival and payment of the goods.

Procurement Management ties in with Warehousing , Financial Management and Project and Service Management.

Requisition

Users can initiate the procurement flow by entering requisitions rather than purchase orders. This enables a clear separation of roles and duties between:

• The Requestor who expresses a demand for goods or services through a requisition.
• The Purchasing Specialist who selects the most appropriate supplier based on the organization strategic procurement objectives and generates the purchase order, either manually or automatically based on rules.

Purchase Order

A ‘Purchase Order’ is a document that specifies products and/or services ordered from a specific vendor, as well as the price, terms and conditions.

Purchase Orders are usually delivered according to contractual agreements with a supplier, specifying payment terms, delivery dates, item identification, quantities, freight terms and all other obligations and conditions.

A ‘Purchase Order’ can be entered manually or easily created by copying an existing Purchase Order. An automated method to create Purchase Orders is by running a program to convert the proposals from a ‘Purchasing Plan’, generated by MRP, to ‘Purchase Orders’.

Purchase Order Attributes

Document number: The ‘document number’ for the ‘Purchase Order ‘can be automatically generated or filled out manually if required

Order Reference: An external reference number of the Supplier can be displayed in this field for reference purposes.

Price List: Per ‘Purchase Order’ a specific ‘Pricelist’ can be selected for the Supplier that will apply to all lines on that ‘Purchase Order’.

Document Status: Different statuses can be selected to indicate in what phase of Procurement the Purchase Order currently is. Examples of document statuses are ‘Draft’, ‘Not Accepted’, ‘Underway’, ‘Completed’, ‘Closed’, etc.

Form of Payment: Different ‘Forms of Payment’ can be selected to indicate the invoice payment. Examples of ‘Form of Payment’ are ‘Bank Deposit’, ‘bank order’, ‘bank remittance’, ‘cash’, ‘credit card’, ‘cash shipment’, ‘money order’, ‘promissory note’.

Payment terms: ‘Payment terms’ is defined to indicate when an invoice needs to be paid

Apart from the above attributes the ‘Purchase Order’ also specifies many other attributes, for example:

• what goods need to be purchased
• the name of the Supplier
• ordered quantity
• prices of the goods
• when the products were ordered
• when they are promised to be delivered
• which warehouse the products must be received in
• who and where the invoice needs to be received
• what tax needs to be applied
• which project the products are required for

The ‘Purchase Order’ indicates the ‘Summed Line Amount‘ (the sum of the amounts on the Sales Order without taxes being added) and the ‘Grand Total Amount’ (the sum of the amounts on the Sales Order including taxes).

Goods Receipt

‘Goods Receipt’ is a document that states the products or goods received from a vendor.

A ‘Goods receipt’ can be generated either manually or automatically. The automatic method can generate ‘Goods Receipt’ based on a ‘Purchase Order’ or a ‘Purchase Invoice’.

Multiple Purchase Orders can be copied to a goods receipt.

A ‘Purchase Invoice’ can be generated automatically from a ‘Goods Receipt’.

Goods Receipt Attributes

Movement Date: Indicates the date when the product moved into inventory, as a result of a receipt of the ‘Purchase Order’ from the Supplier.

Storage bin: The location in the warehouse where the product that was received from the Supplier will be stored.

Attribute Set Value: The products being purchased may have different attributes such as size and colour.

Relationship to Warehousing

When the ‘Goods Receipt’ document is generated and completed, the stocked quantity of the product is updated.

Purchase Invoice

A ‘Purchase invoice’ is an itemized statement or written account of goods delivered by a Supplier. The ‘Purchase Invoice’ received from the Supplier will be checked against the expected invoice.

A ‘Purchase Invoice’ can be generated either manually or automatically. The automatic method can generate a ‘Purchase Invoice’ based on a ‘Purchase Order’ or a ‘Goods Receipt’.

It is also possible to copy from an existing invoice.

‘Goods receipt’ can be automatically generated from a ‘Purchase Invoice’.

Relationship to Financial Management: Payment and Payment Monitor

The ‘Payment’ is automatically generated with the Payment and Invoice Rule defined for the Supplier and with the amount of the ‘Purchase Invoice’. Thus, when a ‘Purchase Invoice’ is completed, Accounting is updated automatically.

Payment Monitor allows users to track the invoice payment status. In this section it is possible to know whether an invoice is fully paid or not. If the invoice has not been fully paid then the Payment Monitor informs the user how much has been received, how much is pending, the due date of the next payment and the amount that is expected to be received on that date. The status can be updated automatically by a background process or manually for each invoice. The date when the payment status was last time calculated is displayed in the form. Filter pop-up window allow the user to filter invoices based on fully paid or not criteria (display all option is also available).

User Story

• John knows that in two weeks a production of product C needs to start but there is not enough raw material A and B in stock.
• He opens the Requisition window and creates a new requisition. He does not need to insert additional data in the header as the Document Number is automatically generated.
  • He creates a line for Product A, sets the Due Date for a day before the production starts and fills out the desired quantity. He does the same for Product B.
  • After inserting all the products he completes the requisition.
• Mary reviews all freshly arrived requisitions and sees that there is a new one.
  • After checking all requisitions, she clicks the Create Purchase Orders button and runs the process.
  • The process ends with a message showing the created Purchase Orders numbers. The system then closes the completed requisition.
• Mary navigates to the newly created Purchase Orders and checks them.
  • She notices that Product A could get a volume discount for purchasing a slightly larger quantity, so she puts the PO back in draft status and changes the quantity of Product A to get the desired discount.
• After a couple of weeks the vendor ships the goods and Mike in the warehouse uses a Goods Receipt to document what goods have arrived and the inventory gets updated (Warehouse Management).
• Mike also creates a Purchase Invoice based on the invoice that the vendor sent. Upon completion of the Purchase Invoice a Payment gets generated to alert Accounting that the vendor needs to be paid (Financial Management).
• After all goods have been received, Mary closes the Purchase Order.

Business Intelligence (BI)

Business Intelligence (BI) consists of a broad category of applications and technologies for gathering, storing, analysing and providing access to data to help users make better business decisions.

BI applications include the activities of decision support systems, query and reporting, statistical analysis, forecasting and data mining.

The configuration of most reports is multidimensional. The user can select which type of information to use, in order to group and filter results.

Also, a comparative analysis can be made, for example looking at purchase trends over a length of time (e.g. one year) or the same period in previous years.

The reports can be displayed in HTML or PDF format.

Purchase Dimensional Report

This report shows registered Purchase Orders during a selected time period. With this report it is possible to show which Supplier is bought from most frequently and what products have been bought during the selected time period. Parameters for this report are the filters: dates, ‘Supplier’, ‘Product’.

A comparative report can be run to compare data between two different date ranges.

A grouping can be selected for the output of the Report.

Goods Receipt Dimensional Report

Similar to the ‘Purchase Dimensional Report’, but related to ‘Goods Receipt’.

Purchase Invoice Dimensional Report

Similar to the ‘Purchase Dimensional Report’, but related to ‘Purchase Invoice’.

Purchase Order Report

This report shows a list of all Purchase Orders grouped by Supplier. The report can be filtered by ‘Time Period’, ‘Warehouse’, ‘Project’, and ‘Business Partner’.

Vendor Invoice Report

Similar to the ‘Purchase Order Report’, using the same filters, but related to ‘Vendor Invoice’.