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10dis60s-pur

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    Unit 10Purchasing

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    4/29/2010

    Unit 10Purchasing Unit Introduction ........................................................................................................ 1

    Unit Objectives ..................................................................................................... 1

    Terminology .......................................................................................................... 2 What is Purchasing?.................................................................................................. 4

    Purchasing Product Integration ................................................................................. 5

    Integrated Processing .......................................................................................... 7

    Purchasing Maintenance Setup ........................................................................... 8

    Purchasing Concepts ........................................................................................... 9

    Contracts ......................................................................................................... 9

    Commodity Codes ........................................................................................... 9

    Special Charges .............................................................................................. 9

    Procurement Authorization............................................................................ 10

    Purchasing Dates .......................................................................................... 11

    Performance Measures ................................................................................. 12

    Purchase Unit of Measure............................................................................. 13

    Vendor Master File ............................................................................................. 14

    Address Master .................................................................................................. 15

    Schedule Release Process Flow ........................................................................ 16

    Release Methods ............................................................................................... 17 Quotes ..................................................................................................................... 18

    Purchase Order Release and Maintenance ............................................................. 19

    Purchase Order Processing Steps .......................................................................... 21

    Purchase Order Line Pricing .............................................................................. 23

    Purchasing Inquiry.............................................................................................. 25 Receiving Procedures.............................................................................................. 26

    Purchase Order Receipt-to-Inspection: N ......................................................... 27

    Purchase Receipt Inspection-to-Stock: P .......................................................... 28

    Purchase Order Receipt Direct-to-Stock: U ...................................................... 29

     Table of Contents 10-i

    Purchase Order Invoice Receipts: C ................................................................. 30

    Receiver Tickets ................................................................................................. 31

    Purchase Order Lines ................................................................................... 31 Purchase Order Costs .............................................................................................. 35

    Actual Cost Update Methods ......................................................................... 37

    Purchase Price Variance .................................................................................... 38 Drop Shipment Purchase Orders ............................................................................. 39

    Drop Shipment Release ...................................................................................... 40

    Tracking and Management ................................................................................. 41

    Drop Shipment Purchase Order Receipts........................................................... 42 Purchasing Review .................................................................................................. 43 List of Figures

    Figure 10-1. What is Purchasing? ............................................................................ 4

    Figure 10-2. BPCS Purchasing Product Integration.................................................. 5

    Figure 10-3. Paperless Processing ........................................................................... 7

    Figure 10-4. Master File Setup ................................................................................. 8 Figure 10-5. Procurement Authorization Example .................................................. 10

    Figure 10-6. Dates Associated with a Purchase Order ........................................... 11

    Figure 10-7. Purchase Unit-of-Measure - Pens ...................................................... 13

    Figure 10-8. Vendor Master File ............................................................................. 14 Figure 10-9. Address Master................................................................................... 15 Figure 10-10. Schedule Release Process Flow ...................................................... 16

    Figure 10-11. Release Methods - Selection Criteria ............................................... 17

    Figure 10-12. Purchase Order Release/Maintenance ............................................ 19

    Figure 10-13. Purchase Order Processing Steps ................................................... 22

    Figure 10-14. PO Line Pricing................................................................................. 23 Figure 10-15. Purchase Order Inquiry .................................................................... 25

    Figure 10-16. Purchase Order Lines ....................................................................... 31

    10-ii Supply Chain Management WorkshopStudent Guide

    Figure 10-17. Receiving through Inspection ........................................................... 32 Figure 10-18. Receiving Direct to Stock ................................................................. 33 Figure 10-19. Actual Cost Update Methods ............................................................ 37 Figure 10-20. Purchase Price Variances ................................................................ 38 Figure 10-21. Drop Shipment Processing Flow ...................................................... 39 Figure 10-22. Drop Shipment Release ................................................................... 40 Figure 10-23. Drop Ship Process ........................................................................... 42 List of Tables

    Table 10-1. Quote Example .................................................................................... 18 Table 10-2. Transaction Effects on PO to quantity in inspection/received ............. 27 Table 10-3. Receiving Method Comparison ........................................................... 34 Table 10-4. Purchasing Cost Types ....................................................................... 36 Table 10-5. Drop Shipment Order Types ................................................................ 41

     Table of Contents 10-iii

10-iv Supply Chain Management WorkshopStudent Guide

Unit Introduction

    This unit is an overview of purchase order processing, setup, and integration with other BPCS products. Topics include the generation of purchase orders, purchase order receipts, month-end close, and year-end close. Other areas include:

    ? Recording requirements

    ? Ordering material requirements

    ? Material acquisitions

    ? Supplier/vendor negotiations

    ? Supplier/vendor communications ? Drop shipment purchase order handling ? Tracking open purchase orders

    ? Handling dock-to-stock inventory transactions

    ? Tolerance checks ? Costing purchase orders

    ? Evaluating supplier/vendor performance ? Authorizing procedures

    Unit Objectives

    At the end of this unit you will be able to:

    ? Establish quotes for purchased goods. ? Identify how purchase orders and requisitions are generated and maintained in BPCS for

    inventory items and commodities.

    ? Identify receiving purchased goods methods. ? Release and process a drop shipment. ? Explain Customer Order Entry integration. ? Confirm purchase order receipt.

     Purchasing 10-1

    Terminology

    Listed below are terms presented in this unit.

Set by the inventory/costing System Parameters Generation. It is the Accounting

    cost set which will post to the Configurable Ledger. Standard Cost

    Actual cost per unit invoiced by the supplier/vendor for a specific Actual Cost

    purchase order receipt. It may include shipping costs and tax.

    To take the title of the product but not actually handle, stock, or Drop Ship

    deliver it, i.e., to have one supplier ship directly to another or to have

    a supplier ship directly to the buyer’s customer.

    The date when an item is needed for a customer, shop, production, or Due Date

    resupply order.

    Tracking and performance measurement of when delivery to the Early Delivery

    warehouse precedes scheduled delivery date minus days tolerance for Performance by

    early delivery. Warehouse

    Cost per unit assigned to an item on a specific purchase order line. Expected Cost

    Tracking and performance measurement of when delivery to the Late Delivery

    warehouse exceeds scheduled delivery date plus days tolerance for Performance by

    late delivery. Warehouse

    Receiving warehouse automatically assigned for all planned purchases Mass Release

    generated by Material Requirements Planning (MRP) and Master Warehouse

    Production Scheduling (MPS) within a facility. There is only one mass

    release warehouse per facility, this warehouse may be overridden.

    When delivery to the warehouse equals the scheduled delivery date On time Delivery

    plus or minus tolerance days. by Warehouse

    Used to purchase any manufacturing or processing services performed Outside Process

    outside the company such as plating or special machining processes. Purchase Orders

    10-2 Supply Chain Management WorkshopStudent Guide

The variance in Purchasing is the difference between actual and Purchase Price

    expected cost. Purchase price variance in the Accounts Payable Variance (PPV)

    system is the difference between actual and accounting standard cost.

    When an item is transferred from inspection-to-stock or received Quality

    directly to stock. Performance

    A quote for an item or commodity is entered in correlation with an Quote

    agreement with a vendor/supplier for a specified date range. The

    quote is entered with tiered quantity breaks and the quoted price per

    quantity break.

    Cost per unit quoted for an item and quantity by a specific Quoted Cost

    supplier/vendor.

    The receiving warehouse is the warehouse assigned when creating Receiving

    requisitions and purchase orders. It must reside within a facility Warehouse

    assigned to a purchase order line.

    When an item quantity from a purchase order is rejected instead of Rejected

    being received to stock. Date when a purchase order is placed with the supplier/vendor. Release Date

    Date adjusted for inspection days for a purchased item to be received Scheduled Delivery

    into the warehouse to meet the due date. Date

    Current standard cost per unit for an item established through the Standard Cost

    Cost Accounting product (if installed); otherwise it is entered through

    Item Master file (IIM). Specifies supplier/vendor delivery percentage over or under the Supplier/Vendor

    expected delivery amount. Quantities within tolerances are considered Tolerance

    fully received.

    Purchase order delivery tolerances may be established globally in the Tolerance

    system parameters, by warehouse, and by commodities.

     Purchasing 10-3

What is Purchasing?

    The function of procuring materials, supplies, and services. Purchasing maintains purchase

    order priorities, reports, and status, facilities negotiation and monitors supplier capacity and

    performance in order to achieve quality, delivery, and cost objectives.

    Procuring

    Buyer

    Materials and SuppliesVendor/Supplier

    Figure 10-1 What is Purchasing?

10-4 Supply Chain Management WorkshopStudent Guide

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