THE PROCUREMENT PROCESS
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- Laurence Townsend
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1 THE PROCUREMENT PROCESS PART 2 Fall 2010 Information Systems Implementation Topics The Procurement Process Procurement Reporting 1
2 A Detailed Procurement Process Requirements Determination Typically triggered by the material planning process (MRP). Purchase requisition is a planning document with no external obligation. May result is requisition for item with no material master. If MM exists, can be referenced specifically in requisition. No FI or CO impact to process steps (unless commitment management being used). No material documents generated or changed. 2
3 Purchase Requisition Data Elements A Detailed Procurement Process 3
4 Purchase Requisition to Purchase Order Source Determination: Supplier must be designated to convert PR to Purchase Order. Potential suppliers come from source list. If item to be purchased referenced in outline purchase agreement, source and pricing may be established. Items are called off against contacts or scheduling agreements as purchased. As these fulfill contact obligations, orders are called (contract) release orders. Purchase Order Process Purchase orders can be created with or without reference to purchase requisitions, RFQs, quotations, or other purchase orders. Purchase orders: source document used in goods receipt and invoice verification processes. No FI or CO impact to process steps (unless commitment management being used). No material documents generated or changed. 4
5 Purchase Order Data Elements Purchase Order Structure 5
6 Purchase Order Communication A Detailed Procurement Process 6
7 Goods Receipt Delivery Document or Packing List provided by supplier with shipment. Goods Receipt Document, Material Document, and Accounting Document created. PR and PO updated. Goods Receipt Document 7
8 Material Document, Accounting Document FI Impact of Goods Receipt 8
9 What happens when goods are received? Material master updated to show stock count and value (inventory) If consumable material may not have MM. If MM exists, no value reflected. FI document (Inventory and GR/IR or Expense and GR/IR) Material document (change in quantity in storage location) related to goods movement Quality management inspection triggered (if assigned) Transfer requirements to warehouse (if WM) Hard copy of goods receipt slip generated Notification of goods receipt sent to designated party Purchase order and purchase order history updated. A Detailed Procurement Process 9
10 Invoice Receipt and Verification Three way match: purchase order, goods receipt document, invoice. Purchase-order-based invoice verification: settle all items regardless of partial deliveries. Goods-receipt-based invoice verification: use goods receipt as basis for invoice entry. Invoice Verification Data 10
11 FI Impact of Invoice Receipt and Verification What happens when an invoice is posted? Material master valuation information updated. Purchase order and purchase order history updated. FI document (GR/IR and Vendor) 11
12 Payment Process Payment Process Data 12
13 FI Impact of Vendor Payment A Detailed Procurement Process 13
14 Procurement Reporting Data sources: Organizational data Master data Material Master Vendor Master Transaction data Purchasing documents Material documents Accounting documents Invoice documents Report Types Instance reporting Status of the process. Reflected on Purchase Requisition and Purchase Order documents. Online Lists List of purchase orders, invoices, etc. Work Lists Requisitions, Invoices to be Paid Logistics Information Systems Based on information structures from purchasing activities (and other processes) 14
15 Copyrights Presentation prepared by and copyright of Dr. Tony Pittarese, East Tennessee State University, Computer and Information Sciences Dept. Podcast lecture related to this presentation available via ETSU itunesu. Microsoft, Windows, Excel, Outlook, and PowerPoint are registered trademarks of Microsoft Corporation. IBM, DB2, DB2 Universal Database, System i, System i5, System p, System p5, System x, System z, System z10, System z9, z10, z9, iseries, pseries, xseries, zseries, eserver, z/vm, z/os, i5/os, S/390, OS/390, OS/400, AS/400, S/390 Parallel Enterprise Server, PowerVM, Power Architecture, POWER6+, POWER6, POWER5+, POWER5, POWER, OpenPower, PowerPC, BatchPipes, BladeCenter, System Storage, GPFS, HACMP, RETAIN, DB2 Connect, RACF, Redbooks, OS/2, Parallel Sysplex, MVS/ESA, AIX, Intelligent Miner, WebSphere, Netfinity, Tivoli and Informix are trademarks or registered trademarks of IBM Corporation. Linux is the registered trademark of Linus Torvalds in the U.S. and other countries. Oracle is a registered trademark of Oracle Corporation. HTML, XML, XHTML and W3C are trademarks or registered trademarks of W3C, World Wide Web Consortium, Massachusetts Institute of Technology. Java is a registered trademark of Sun Microsystems, Inc. JavaScript is a registered trademark of Sun Microsystems, Inc., used under license for technology invented and implemented by Netscape. SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, SAP Business ByDesign, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries. Business Objects and the Business Objects logo, BusinessObjects, Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius, and other Business Objects products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of Business Objects S.A. in the United States and in other countries. Business Objects is an SAP company. ERPsim is a registered copyright of ERPsim Labs, HEC Montreal. Other products mentioned in this presentation are trademarks of their respective owners. 15
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