A fully integrated Purchasing System includes Requisitions, Purchase Orders, Blanket Orders, Change Orders, Multi-level Approvals, Posting, Printing, Receiving, Invoice Reconciliation and a Vendor Database. The use of Requisitions, Blanket Orders, and Invoice Reconciliation are all optional. Start simple and expand as the need develops.
A normal Purchasing/Receiving cycle is as follows:
1. Create a Requisition, manually or automatically (optional).
2. Add a Requisition to a Purchase Order (optional).
3. Create a Blanket Order (optional).
4. Create a Request for Quote (optional).
5. Generate Purchase Orders from Blanket Orders or from Assigned Quotes (optional).
6. Create a Purchase Order.
7. Print the Purchase Order (optional).
8. Post the Purchase Order.
9. Fax Purchase Order to vendor (optional).
(Define a fax machine as a "printer" and send PO to "printer".)
10. Process a Change Order on a Purchase Order (optional).
11. Receive goods.
12. Reconcile Receipts against Purchase Orders (optional).
13. Transfer Purchase Orders to a History File.
Different Departments may be responsible for Requisitioning, Ordering, Receiving, and Reconciliation. The basic cycle remains the same if one person is responsible for the tasks instead of separate Departments.
There is a many to many relationship between Requisitions, Blanket Orders, Purchase Orders, Receipts and Invoices. A Blanket Order will spawn multiple Purchase Orders. Line Items from a single Requisition may be transferred to different Purchase Orders. Conversely, Line Items from many Requisitions will appear on a single Purchase Order. A Receipt is limited to a single Vendor, but may include Line Items from more than one Purchase Order. Finally, the Vendor's Invoice may contain Line Items from multiple Purchase Orders and some of those Line Items or Purchase Orders may have been partially shipped. The system is designed to handle all combinations of the above and to provide a full audit trail at the Line Item level.
The Security and Authority Control Systems can be used to control access to data and to limit access to the Purchasing functions. Normally, Requisitions are created automatically during the process of Work Order Planning or are entered manually by maintenance workers. Purchasing is then limited to the Purchasing Department and specific individuals with Purchasing Authority.
Requisitions can either be created manually or created automatically by other parts of the system. For example, the Automatic Inventory Reorder Process will create a Requisition when the use of an Inventory Item on a Work Order causes its Projected Inventory Balance to fall below the preset Minimum Level.
In the case of Stock replenishment, Vendor Number and Price is retrieved from the Inventory Master File. Vendor Number and price for non-inventory items can also be stored in the Inventory File by creating an Inventory record and setting it to Memo status. Non-inventory items not entered in the Inventory file must have the Vendor Number entered on the Requisition before the Requisition can be added to a Purchase Order.
A checkbox on the Set Purchasing Software Switches screen specifies whether Requisitions must be approved before they are added to Purchase Orders. If more than one person needs to authorize the Requisition, use Extended Authorizations. Optionally, Department Level Authority can be setup so if a user in that department does not have a sufficient dollar level to authorize the requisition it will automatically be forwarded on to the next Supervising Department, and so on until it reaches a Department with enough authority to cover the cost.
Requisitions can be added to Purchase Orders manually by editing the Requisition and indicating which Purchase Order a line item is to be transferred to. However, a much quicker and more convenient way is using the Transfer Requisitions to Purchase Orders Menu option to automatically create a Purchase Order for all Requisitions that can be serviced by a specified Vendor.
Purchase Orders Summary
Purchase Orders can be created from Requisitions or generated by a Blanket Order. They also can be created manually.
A checkbox on the Set Purchasing Software Switches screen specifies whether Purchase Orders must be authorized. Purchase Orders are automatically authorized when they are initiated if the checkbox is left blank. If the checkbox is checked, they must be authorized by someone who has the authority to authorize Purchase Orders. The authorizer's dollar limit is checked against the amount of the Purchase Order. Set the dollar amount in Maintain Employee Authorizations.
After the Purchase Order has been authorized, it needs to be Printed and Posted. Posting encumbers the funds and indicates that the Purchase Order has been sent to the Vendor.
The Purchase Order is now ready to be Received when items are available.
Invoice Reconciliation after receiving is optional.
Finished Purchase Orders are sent to a History file on a regular basis.