10/11/2010
THE PROCUREMENT PROCESS
PART 2
Fall 2010
Information Systems Implementation
Topics
The Procurement Process
Procurement Reporting
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10/11/2010
A Detailed Procurement Process
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
Requirements Determination
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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.
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Purchase Requisition Data Elements
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
A Detailed Procurement Process
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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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
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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.
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Purchase Order Data Elements
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
Purchase Order Structure
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Purchase Order Communication
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
A Detailed Procurement Process
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Goods Receipt
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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
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Material Document, Accounting Document
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
FI Impact of Goods Receipt
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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
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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10/11/2010
Invoice Receipt and Verification
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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FI Impact of Invoice Receipt and Verification
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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)
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Payment Process
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
Payment Process Data
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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FI Impact of Vendor Payment
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
A Detailed Procurement Process
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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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)
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Copyrights
Presentation prepared by and copyright of Dr. Tony
Pittarese, East Tennessee State University, Computer and
Information Sciences Dept. (pittares@etsu.edu)
Podcast lecture related to this presentation available via
ETSU iTunesU.
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