Sourcing and Agreement Information

The extent of procurement activities to define source and agreement information for purchased material depends on the situation. For example, little effort may be expended on one-time orders for non-stock items, so that the purchase order itself defines an agreement. Some cases warrant solicitation and definition of one-time purchase quotes or reverse auctions from relevant vendors , where a quote or an auction winner defines the price basis for a purchase order. Considerable effort may be expended on vendor agreements for critical or frequently replenished material. The vendor agreement data provides the basis for automatically calculating prices and discounts on purchase orders, purchase quotes, blanket purchase orders, and other purchase documents. Some cases require the additional control provided by a blanket purchase order since it tracks an item s cumulative orders and receipts against the blanket and enforces maximum quantity limitations. This section summarizes these different approaches for the definition and use of sourcing and agreement information.

Preferred and Approved Vendors

Information about approved vendors and a preferred (or default) vendor can be defined for material items and on outside operations for manufactured items.

Preferred and Approved Vendor for a Purchased Material

The approved vendors for an item, or conversely the approved items for a vendor, represent cross-reference information. Information about an item s approved vendor includes the mapping between the internal and vendor item numbers and UM, and a vendor item description and purchase lead-time . An item s approved vendors can be viewed and selected on a suggested purchase.

An item s preferred vendor (also termed the primary or default vendor) represents location-specific information, and can be defined for each SKU. It serves as the default on suggested purchases for the location.

Preferred Vendor on an Outside Operation for a Manufactured Item A subcontract manufactured item typically has a master routing with one or more subcontracted outside operations. A vendor performing outside operations is defined on the vendor master. An external work center is also defined that corresponds to the vendor, with the vendor number specified as the preferred vendor. The external work center can then be defined on a routing operation for the outside operation, with an operation-specific description (for subcontracted work to be performed) and per-unit price (that represents a form of a vendor agreement). Outside operations were explained in Chapter 3.

Vendor Agreements about Pricing and Discount

Various forms of vendor agreements can be expressed that affect pricing and discounts. An agreement may involve other aspects, such as freight charges, payment terms, or delivery dates. Further explanation focuses on pricing and discounts.

A vendor agreement s price information typically specifies consideration of factors such as date effectivities and quantity breakpoints, with information identified in a purchase price worksheet. Some agreements also specify discount percentages applicable to items, with information identified in a purchase line discount worksheet. And some agreements specify a discount percentage or service charge amount related to total order value, with information identified in a vendor-specific invoice discount worksheet. These three worksheets have parallel counterparts for sales purposes, as previously described in Chapter 2.

Purchase Price Worksheet A purchase price worksheet defines agreed-upon item prices from a pay-to vendor, and provides automatic price assignment during purchase order entry. Item pricing often reflects one or more of the factors shown in Figure 6.2. For example, pricing by item and unit of measure can indicate different prices per item and per pallet, while pricing with date effectivities supports periodic updates for pricing agreements. Price assignment reflects the order date and a vendor policy defines whether prices include tax.

click to expand
Figure 6.2: Purchase Prices and Line Discounts

A simple price agreement requires one worksheet entry for each item. Additional worksheet entries would be required for variations in the purchased item s UM and quantity breakpoints. Note that a set of worksheet entries cannot be assigned a unique identifier such as an agreement number, but filters can be used to view a subset of worksheet entries. The user can view available item prices during purchase order entry, such as viewing quantity breakpoints or future pricing to guide purchase decisions.

Purchase Line Discount Worksheet A purchase line discount worksheet defines agreed-upon item discount percentages from a pay-to vendor, and provides automatic discount assignment during purchase order entry. An item s discount percentages often reflect one or more of the factors shown in Figure 6.2, such as discount percentages that vary by quantity breakpoint. The approach to defining worksheet entries mirrors the approach for a sales line discount worksheet, and the user can view available line discounts during purchase order entry to guide purchase decisions.

Discounts and Service Charges Related to Total Purchase Order Value An invoice discount worksheet defines the agreed-upon invoice discount percentage and/or a service charge amount that applies to total order value for purchase orders placed with a vendor. Value breakpoints can also be defined. For example, an order exceeding $100 obtains a 10 percent discount while an order exceeding $500 obtains a 20 percent discount. A service charge example would be a $25 fee for an order less than $100. The service charge appears as a separate line on the purchase order (identified by the G/L account description for service charges). An invoice discount percentage and a service charge amount can both be defined for a vendor.

Purchase Quote

A purchase quote specifies the item price and quantity for one or more line items, and acts like a purchase order in many ways. For example, it uses the same approaches for pricing and discounting, cross reference identifiers, order-related text, purchase order variations, and templates. A purchase quote can also inherit vendor agreement information about pricing and discounts, and the quote s statistics window mirrors the summarized information for a purchase order. A request for quote can be sent via an outbound Biztalk document; a quote can also be created from an inbound Biztalk document.

A purchase quote can be converted or copied to a purchase order. When converting a quote, the system automatically assigns a separate purchase order number, creates the same line items as the quote, and deletes the quote. Copying the quote allows multiple usage.

start sidebar
Rules for Using Inbound Biztalk Documents

The ability to electronically exchange information requires identification of the vendor as a Biztalk partner, the authorized inbound and outbound documents, and the rules for exchanging information. A basic rule determines whether the vendor s transactions identify the internal item number, the vendor item number, or the common item number. Outbound documents include a purchase order and a request for purchase quote (generated from the Purchase Quote window). Inbound Biztalk documents include purchase quotes, purchase order confirmations , purchase receipts, and a vendor s product catalog. Several rules apply to each type of inbound Biztalk document, as illustrated below for a purchase quote.

An inbound Biztalk document for a purchase quote often represents the response to a request for quote. Rules governing the inbound purchase quote include manual versus automatic acceptance of the information, create new purchase quote versus modify existing purchase quote, and automatically adjust information (such as quantity and price) on an existing quote versus prompt for confirmation during manual acceptance.

end sidebar

Reverse Auctions and Handling a Request for Quote (RFQ)

A reverse auction represents an electronic approach to generating a request for quote (RFQ). It uses Internet commerce capabilities to send a request for quote to vendors, record their responses, and announce the winner and losers, and the winning response provides the basis for generating a purchase order. A reverse auction involves several steps: (1) define vendors as participants, (2) create a reverse auction, (3) choose vendor participants , (4) handle vendor responses, and (5) choose a winner and create a purchase order. Each reverse auction ( identified by an auction number) identifies only one item and the Web site to which it belongs, and a status indicates whether it is unreleased, released, withdrawn, closed for offers, or completed with a purchase order generated.

Automatic creation of reverse auctions represents one approach for supporting order-point replenishment. Automatic creation of reverse auctions and identification of vendor participants (steps 2 and 3 above) can be performed for any item using a replenishment method based on order-point logic. A reverse auction is automatically created when any item s inventory falls below its reorder point. Automatic assignment of vendor participants reflects each item s preferred vendor, approved vendors, or all vendors flagged as agreeing to participate in reverse auctions.

Blanket Purchase Orders

A blanket purchase order specifies an item and aggregate quantity for one or more line items, where each item s aggregate quantity provides the basis for pricing and discounts. Each line item on a blanket order also specifies a shipment date that represents an approximation of when the aggregate quantity will be received. Many aspects are similar to a purchase order, such as the handling of order-related text and kit items.

Each purchase order line item related to a blanket order line item inherits its pricing and discount information and consumes the aggregate quantity. The cumulative purchase order quantities cannot exceed the aggregate quantity. The user can convert a blanket purchase order into a purchase order for the entire quantity or a partial quantity. This is sometimes referred to as a release against the blanket purchase order . The system automatically assigns a separate purchase order number, and identifies the originating blanket purchase order and line number on each purchase order line item. An alternative approach involves manual identification of the relevant blanket purchase order and line number when creating a purchase order line item. In either case, the system tracks the cumulative quantity shipped and invoiced for the blanket purchase order.

Managing Your Supply Chain Using Microsoft Navision
Managing Your Supply Chain Using Microsoft Navision
ISBN: 0071435247
EAN: 2147483647
Year: 2003
Pages: 71 © 2008-2017.
If you may any questions please contact us: