This post discloses the features of the ERP purchasing module, purchase procedure steps, purchase order & its types. You will also get a list of suitable vendors for this module.
ERP Purchasing module streamlines the procurement of required raw materials. In addition, it automates the processes of buying.
Processes include identifying potential suppliers and 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 the 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.
Before sending the requisition, it is necessary to identify the goods or services to be purchased, and it is also vital 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 orders submitted to the selected supplier. If purchasing goods or services is more expensive and exceeds the budget, 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, they will be reviewed carefully to ensure that received goods/services are ordered only.
Matching of Documents
In this stage, the matching of shipping documents, the invoice issued by the vendor, and the original purchase order take place to ensure all the transactions are entirely accurate.
Invoice Approval and Payment
Once all the verification of goods/services and documents are done, the invoice will be approved, and the supplier will issue payment.
Benefits of ERP Purchasing module
Reduces the procuremet process time
With the help of the ERP purchasing module, you can reduce the time required for the procurement processes.
- It reduces the manual data entry
- It makes the approval process faster
- It saves and retrieves information
- It makes invoice processing easy
- It reduces the time required to track the commitments while doing budget.
Provides good data quality
Data qualities of the purchase orders or invoices are reasonable compared to the same document generated using word or excel.
Purchasing module assigns purchase order numbers and dates automatically.
Provides good hold of the procure-to-pay process
It shares information such as invoice processing, billing, cost allocation, and purchase order-related files with the suppliers.
Controls budget in real-time
This system shows the complete picture of committed costs on a budget at all times. When you have reasonable control, you will make better decisions and determine the possibilities of extra costs earliest.
Allows you to access historic data easily
Digital archives help you to find out the previous orders and order quantities.
Makes internal approval process easy
Internal approval of purchase orders or invoices is the biggest challenge without purchasing system.
When the approval is in the form of an e-mail, you need to follow up on it, and when it is in the form of a document, there is a chance of missing it. These are time-consuming also.
With the help of the purchasing module, you can overview which PO is approved and by whom. You can also trace this information whenever you want.
Enhances data security
The system provides more security to data. With this system, you will have the authority to decide who can see, change, and approve the data. Hence you can protect valuable information.
Need not depend on people
It automates the process; hence you need not depend on IT professionals, and all can find the real-time information.
What is a Purchase order?
A purchase order is an important document and can be generated with the help of the ERP purchasing module.
A purchase order is an official document issued by the buyer’s purchasing department 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 serves as a contract.
How does a purchase order is different from a sales order?
A purchase order is a document generated by the customer and issued to the supplier. It confirms the purchase of the goods.
But a sales order is a document generated by the supplier and issued to the customer. It confirms the sale of the goods before the fulfillment of the order.
Purchase order format
Purchase order format contains
- Customer order
- Customer address
- Purchase order number
- Purchase order date
- Vendor name
- Vendor address
- Shipping address
- Item name
- Description of the item including technical information if any
- Unit cost
- Quantity of the item
- Total cost
- Final cost
Types of Purchase Orders
There are four types of Purchase Orders. That 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.
What are purchase order costs?
Purchase order costs are labor costs, insurance, duties, fees, and freights.
Best Vendors for ERP Purchasing Module
1. Promena e-Sourcing
It is a cloud-based software with strategic solutions such as a request for proposal, request for information, and request for quotation.
The client can purchase this software monthly or pay it for its service per project. In addition, it also provides support, consultancy, and onboarding services to its clients.
Kissflow also provides cloud deployment. For example, with the help of Kissflow procurement cloud, customers can handle their procurement process for both goods and services with complete flexibility.
It automates the three-way matching and tracks real-time budgeting.
It is a cloud-based software and much suitable for small and medium businesses. It also provides three-way matching and real-time budgeting.
One of its key features is visual analytics on the use ups of all departments.
It is one of the popular cloud-based vendors. It provides many ERP modules such as purchasing, finance, CRM, sales, production, human resource, etc. Much suitable for small and medium businesses.
It provides cloud deployment. It is suitable for all types of businesses, from small to large. It provides a smooth flow of purchase requests, workflow approval, and blockchain payments.
Other features include monitoring of KPI, reporting, notifications, etc.
6. E2 Shop system
It is a cloud-based software. It suits job shops, contract businesses, and make-to-order industries. Alon with the purchasing module, it also provides accounting, shipping, scheduling, and customer management.
ERP purchasing module helps the business with its helpful features. It streamlines the procurement process. You will get many great vendors of this module to enhance your business.
Find more about the ERP purchasing module and related ERP modules here.