ERP Purchasing module streamlines the procurement of required raw materials. It automates the processes of buying. Processes include identifying potential suppliers, negotiating the price. Awarding purchase orders to the supplier, and billing processes are also included.
ERP purchasing module is tightly integrated with the inventory control and production planning modules.
The ERP purchasing module is often integrated with supply chain management software.
Features of ERP purchasing module
ERP purchasing module has following features
- Streamlines purchase and process cycles.
- Detailed Supplier/Subcontractor/Service Provider database.
- Capturing materials requirement.
- The automatic firing of purchase requisitions based on MRS.
- Quotations from various suppliers.
- Recording Payment terms in PO.
- Excise consideration in Purchase and Process Orders.
- PO authorization.
- PO amendments with complete amendment history.
- Order cancellation and order closing.
- Multiple delivery schedules.
- Quality inspection of goods.
- Quotation validity.
- MIS for vendor evaluation based on quality, price & delivery time.
- Subcontracting, generation of process orders.
- Multiple indents for multiple items in a single PO.
- Purchase order processing.
- Purchase order entry with item details and other details like taxes, discounts. Extra charges like freight, P&F, octroi.
- Flexibility to generate Purchase Order in domestic and foreign currency.
- Advance adjustments.
- Purchase bill with updating of GL and purchase book.
- Service contracts, Service Bills, Service indents, and PO.
- Value-based approval of indents.
- Bill of entry.
- Complete import functionality with the handling of custom details. Purchase bill for import, excise consideration in imports.
- Reports for order tracking for complete control over the procurement cycle.
ERP Purchasing module aims at making available the required materials of
- The right quality.
- In the right quantity.
- At the right time.
- At the right price.
for the smooth functioning of the organization.
Purchase Procedure steps
Following are the steps of the purchase procedure in the ERP purchasing module.
Purchase requisition: Before sending the requisition it is necessary to identify the goods or services to be purchased and it is also important to select the right supplier. Once all these are done, purchase requisitions will be submitted. Purchase requisition contains full details of goods or services to be purchased.
Purchase order: Purchase orders submitted to the selected supplier. If purchasing goods or services are more expensive and exceed the budget, then it will be forwarded for review and approval before creating a purchase order. The approved purchase order will be sent to the account section for verification.
Review and approval: The accounting department verifies the availability of funds to purchase the goods or services and approves the purchase order.
Requests for quotation: This will be sent to the supplier to fulfill the orders.
Review of receiving goods /services: Once goods or services delivered by the vendor are received it will be reviewed carefully to ensure that received goods/services are ordered only.
Matching of documents: In this stage matching of shipping documents, the invoice issued by the vendor, and the original purchase order takes place to ensure all the transactions are completely accurate.
Invoice approval and payment: once all the verification of goods/services and documents are done then the invoice will be approved and payment will be issued to the supplier.
What is a Purchase order?
A purchase order is an official document issued by the purchasing department of the buyer that contains the details about the item to be purchased, the quantity of the item, and the price of the item.
Many people may not know about the difference between a purchase order and an invoice. An invoice is the document issued by the supplier when delivery of the goods or services is completed.
It acts as a bill that contains the amount to be paid by the buyer, whereas the purchase order acts as a contract.
Types of Purchase Orders
Basically, there are four types of Purchase Orders. This is categorized based on the amount of information provided by the purchaser concerning his upcoming purchase.
- Standard Purchase Order: It is the most commonly used PO. It contains the details of the purchased item, quantity, payment terms, and delivery date. Standard POs are usually generated for one-time purchases.
- Planned Purchase Order: It contains the details of the purchased item, the quantity of the item, and payment terms. It does not contain a delivery date. For example, a buyer requires 5 xerox machines at a certain price he generates a planned PO. Once he knows the needed date he generates a standard PO.
- Contract Purchase Order: When the purchaser does not know which item will be ordered. But he agrees to the terms and conditions with the supplier by generating a contract PO. This acts as a legal document between them. During the contract period, the purchaser sends a standard PO with all details.
- Blanket Purchase Order: It usually contains the detail of items and the number of items. It may or may not include the pricing detail of the item.
Fins more about ERP purchasing module and related ERP modules here.