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ERP MM - Purchasing

Purchasing is a sub-component of Material Management. This page gives information about the Purchasing functionality.

Nomally, Purchasing process is as follow:

  1. Generation of material requirement: Material requirement is generated automatically through MRP and/or manually by user dept group or individuals.
  2. Request for Quotation (RFQs): Once material requirement is identified then based on the procurement type (external procurment), the requirement is processed for getting the quotations from different vendors (including one time vendor)
  3. Maintain Quotation: Vendor will send the quotations back to the purchasing dept giving all informations (terms and conditions) including rates, purchasing dept updates this information by maintaining quotation.
  4. Comparision of Quotation and Vendor selection: once all the quotations are updated then purchasing dept generates comparistion list to get the better picture for final selection of the vendor.
  5. Release Purchase Order: For selected vendor(s), purchasing dept sends purchase order which contains the information for supplying the material or perform of  services, quantity of material/service, delivery schedules, terms & conditions, delivery address etc.
  6. Purchase order confirmation: For some organizaiton, purchase order confirmation is very important to manage/plan their resource and space or to find alternative resource incase of short supply.
  7. Reminders and Follow-up: In some case, purchsing dept follows up with vendor by sending reminders
  8. Advance Notification: Vendor will send information about the supply of material ie. material, qty, against which PO, vehicle number, start date etc. This helps purchasing dept to inform their storage manager for managing their resource and warehouse space.
  9. Goods Receipt: Vendor sends material to the plant and storage/warehouse receives material against purchase order
  10. Invoice Receipt: Vendor sends invoice for the supplied material or performed services. Sometime, this happens before actual receipt of material. Account dept/ invoice dept checks this invoice against goods receipt and/or purchase order to confirm the qty, rate, schedule etc and post the invoice.
  11. Payment: for successful supply, accounting dept will release the payments to the vendor.

More Info and Trouble Shooting Guides