Procure to Pay Process
Upcoming SlideShare
Loading in...5
×
 

Procure to Pay Process

on

  • 1,779 views

Presentation on Procure to pay Process for better understanding of the process,key controls and gaps.

Presentation on Procure to pay Process for better understanding of the process,key controls and gaps.

Statistics

Views

Total Views
1,779
Views on SlideShare
1,761
Embed Views
18

Actions

Likes
3
Downloads
185
Comments
0

1 Embed 18

http://www.linkedin.com 18

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Procure to Pay Process Procure to Pay Process Presentation Transcript

    • Business Process Training Procure to Pay Presented by: Sameer Mittal Date : December 16, 2011
    • Introduction Table of Contents Understanding Procurement to Pay  Process Overview  Overview of Key Activities  Detailed Description of Key Activities Approach  Key Controls 2
    • Procurement to Payment: Process Overview 3 Receiving Vendor Management & Buying Purchase Planning Authorisation of Monthly Production Plan Quotations invited & best quote selected Assessment of monthly material requirements Monitoring of open PRs & POs * Preparation of SRN & updation of Stock Register 3-way match between PO,SRN & Invoice QC test performed Updation of Excise Records Invoicing Authorisation of vendor invoice Authorisation of payment voucher & disbursement Reconciliatiom of Accounting Records with Excise Records Authorisation of PO/ Service Contract Amendments to PO duly approved Vendor Advances & Reconciliations Authorisation of vendor advances Review of vendor ageing analysis* Review of Annual Vendor reconciliations* Order Book (updated with approved works orders) Authorisation of PR for procurement of material / services Vendor performance appraisal Accounting of Invoice Vendor balance confirmation * Vendor empanelment & vendor list updated
    • Procurement to Payment: Key Activities 4 Process Objective Key Activities Review Roles Role Reviewer Key Performance Indicator  Ensure timely availability of products  Coordinating material receipt with sales permit, to reduce material stock outs/ excesses  Optimize Inventory holding Levels  Monitoring Vendor Performance & availability of reliable, low cost vendor base  Identification and development of new vendor 1 Vendor Selection2 Inventory Management 1 Timely and comprehensive intimation to Corporate office about existence of vendors Unit Head Procurement Major Process Process (Aggregation of activities) Procurement PlanningA Sub Process Receipt & Issue of Material5 6 4 Vendor Evaluation EVP –Ops/ DGM Ops/ Procurement Controller 3 Timely procurement in correct quantities and as per desired quality KPIs Vendor SelectionB Inventory Level ManagementC Order placing & trackingD Vendor EvaluationE 3 Order placing, tracking &Invoice verification Procurement planning 1 Rational selection of quality material vendor 2 Efficient procurement planning, which leads to minimum inventory holding cost and with no stock outs 3 Correctly calculated reorder and minimum stock levels 4 Open /Pending PR’s & PO’s 5 Vendor appraisal and feedback on a timely basis Procurement Committee 2 Vendor selection & price revision 2) Material requirement estimation & Business Share Allocation 1) Proc. Plan on sales forecasting basis 2) Vendor assessment, premises visits & approvals 1) Vendor identification
    • Procurement to Payment: Key Activities 5 Process Objective Key Activities Review Roles Role Reviewer Key Performance Indicator  Ensure timely availability of products  Coordinating material receipt with sales permit, to reduce material stock outs/ excesses  Optimize Inventory holding Levels  Monitoring Vendor Performance & availability of reliable, low cost vendor base  Identification and development of new vendor 1 Vendor Selection2 Inventory Management 1 Timely and comprehensive intimation to Corporate office about existence of vendors Unit Head Procurement Major Process Process (Aggregation of activities) Sub Process 2) Analysis of the stock level Receipt & Issue of Material5 6 4 Vendor Evaluation 1) Inventory Holding Levels EVP –Ops/ DGM Ops/ Procurement Controller 3 Timely procurement in correct quantities and as per desired quality KPIs Inventory Level ManagementC Order placing & trackingD Vendor EvaluationE 3 Order placing, tracking &Invoice verification Procurement planning 1 Rational selection of quality material vendor 2 Efficient procurement planning, which leads to minimum inventory holding cost and with no stock outs 3 Correctly calculated reorder and minimum stock levels 4 Open /Pending PR’s & PO’s 5 Vendor appraisal on a timely basis Procurement Committee 2 Vendor selection & price revision Procurement PlanningA Vendor SelectionB 1) Raising of Purchase orders 2) Monitoring order execution 3) Gate Entry & Receipt of material 4) Quality Assurance 5) Updation of store records 6) Warehousing ,Tagging & Physical verification process
    • Procurement to Payment: Key Activities 6 Process Objective Key Activities Review Roles Role Reviewer Key Performance Indicator  Ensure timely availability of products  Coordinating material receipt with sales permit, to reduce material stock outs/ excesses  Optimize Inventory holding Levels  Monitoring Vendor Performance & availability of reliable, low cost vendor base  Identification and development of new vendor 1 Vendor Selection2 Inventory Management 1 Timely and comprehensive intimation to Corporate office about existence of vendors Unit Head Procurement Major Process Process (Aggregation of activities) Sub Process Receipt & Issue of Material5 6 4 Vendor Evaluation EVP –Ops/ DGM Ops/ Procurement Controller 3 Timely procurement in correct quantities and as per desired quality KPIs Inventory Level ManagementC Order placing & trackingD Vendor EvaluationE 3 Order placing, tracking &Invoice verification Procurement planning 1 Rational selection of quality material vendor 2 Efficient procurement planning, which leads to minimum inventory holding cost and with no stock outs 3 Correctly calculated reorder and minimum stock levels 4 Open /Pending PR’s & PO’s 5 Vendor appraisal on a timely basis Procurement Committee 2 Vendor selection & price revision Procurement PlanningA Vendor SelectionB 1) Vendor Appraisal (Monthly & Annual)
    • Procurement Planning 7 Process description Procurement Planning is a fundamental piece of work which should be undertaken prior to commencing a procurement. It consists of activities tailored to prepare all the equipment specifications and associated detail for each item to be procured. Procurement planning as a process has two sub processes under it these are : • Procurement Planning, basis sales forecasting • Material requirement estimation & business share allocation Procurement Planning, basis sales forecasting states the basis of preparation of the production plans, which are the sales numbers forecasted for the next two months (one month firm and next month tentative). Material requirement estimation states the factors and the numbers which are considered while preparing the procurement plan and the business share allocation matrix. : Start Sales team at H.O. to communicate sales forecast to EVP Ops, DGM Ops, Controller Procurement Sales forecast would be for two months. Firm forecast for the immediately succeeding month and tentative for the succeeding month Based on the sales forecast the RM & PM Procurement Plan would be chalked out Closing stock position of the unit is considered for arriving at the final procurement requirement of each material Based on the procurement Plan numbers . Business Share among vendors is allocated Vendor Selection Production Plan1 Closing Stock & FG Report2 Purchase Order3 1 2 3
    • Vendor Selection Process description This process captures various sub process undertaken for selecting the right set of vendors for successful handling of procurement process. It has to be strategically handled and carefully monitored if quality vendors have to be selected for the job A vendor has to work on three aspects, which are as follows : • Quality of supplies • Delivery of supplies • Services delivery aspect : Start Purchase committee to periodically conduct market surveys for new vendors . Quality approve d? VBF shared with the Vendor to fill up Vendor Background Quality Team should then visit vendor premises for further evaluation Samples of the product/ material evaluated Vendor short listed Contract entered with the vendor Unique vendor codes should then be assigned to the vendor Yes No samples & costing of the product to be checked in case of new vendor/ new product Report of vendor premises visit prepared and shared with purchase committee Commercial run quantity ordered to the vendor Quality approve d? Vendor data updated in the vendor master Inventory Holding Levels A A No further Enquiry No Yes 4 7 Vendor self Assessment Vendor premises assessment Report 8 Vendor Code Creation Form9 5 Vendor Price Approval form 6 Technical specification approval 4 7 8 6 5 5 9 10 Logic Note10 Comparative Quotation Analysis
    • Inventory Level Management 9 Process description Inventory Holding levels are levels at which inventories of raw material, packing material and finished product are maintained to attain the following objectives : • Un-interrupted production • Least Capital Blockage • Maintenance of safety stocks to tackle unexpected or uncontrollable factors (e.g. logistic bottlenecks ) • Taking advantage of market conditions : Start Take data from the stock register, Bin cards and closing stock to calculate consumption forecast, inventory holding cost, lead time and ABC classification Establish inventory levels, in the ERP or manually Review inventory levels at a monthly interval to incorporate the changes in the stock levels Order Placing & Tracking
    • Order Placing and Tracking Process description Order placing and tracking encompasses activities from the generation of a purchase order to tracking the receipt of the stocks against the purchase order. It is a essential step post which the production activities initiate : Physical verification at month ends of RA, PM and FG stocks Start P.O to be raised at the H.O. by the Controller Procurement Gate entry and receipt of material Vendor Evaluation Inventory Stock Count sheets11 Consolidation of new bottle procurement requirement by the Controller Procurement PV Variance report12 11 Order Placement of material for Labels, CC cartons Quality assurance Check Updation of the stock records 12 Order Placement of raw material and Packing material (Caps & Mono carton) P.O. would be raised by the DGM Operations/ EVP ops team P.O. would be raised by the Unit Head
    • Key Controls S No Particulars Yes No A Procurement Planning A1 Has the approved monthly production planning sheet been used for the preparation of PR for raw material requirements ? A2 Have all the PRs raised for procurement been serially numbered to facilitate tracking of material procurement? A3 Have the PRs for procurement of goods been reviewed and signed off by the competent authority? A4 Have all the requests for procurement of service been duly authorized and documented ? A5 Have the open PRs been reviewed on a periodic basis? 11
    • Key Controls S No Particulars Yes No B Buying B1 Have the vendor selection forms been duly filled up for all vendors? B2 Have the vendor selection forms been duly reviewed and authorized and updated in the list of vendors ? B3 Have the performances of the vendors been evaluated on a periodic basis and the list of vendors been reviewed and updated by the authorized personnel ? B4 Have written invitations been sent to the vendors (as per the approved vendor list) for inviting quotations? B5 Have certain minimum number of vendor quotations been obtained for procurement & the best quote selected as per the predefined vendor selection criteria ? B6 Have all the best quote selected been approved by the authorized personnel as per the DOA matrix? B7 Have all the POs been raised on a preprinted, serially numbered standardized formats as vetted by the legal team? B8 Have the POs been raised against all valid PRs ? 12
    • Key Controls S No Particulars Yes No B Buying B9 Have all the POs been duly authorized as per the DOA matrix? B10 Have all the amendments to the POs raised been duly authorized as per the DOA matrix ? B11 Have the open POs been reviewed on a periodic basis? B12 Have all the emergency purchases made been regularized? B13 Have all service contracts been duly approved by the authorized personnel as per the DOA matrix ? B14 Has the validity of all the service contracts been duly reviewed on a periodic basis ? 13
    • Key Controls S No Particulars Yes No C Receipt of Materials C1 Have the serially numbered Stores Receipt Notes (SRN) been prepared for all receipts ? C2 Have all SRNs raised been duly updated in the Stock Register ? C3 Have the stock records been duly updated on receipt of goods /materials on a timely basis ? C4 Has the 3-way match between the PO, SRN & the vendor invoice been performed for all receipts ? C5 Have the relevant QC tests been performed as per QC policy of the Company and QC reports been duly authorized by the QC-Head ? C6 Have the goods received been physically inspected (for quantity) after receipt of the QC report & the Excise records updated on a timely basis ? C7 Have all receipts in excess of PO quantity been regularized by the authorized personnel as per DOA matrix ? C8 Have all the updations to the Excise records been reviewed by an independent authority other than the Excise- Executive ? C9 Have all the updations to the Excise records been reviewed by an independent authority other than the Excise- Executive ? 14
    • Key Controls S No Particulars Yes No D Invoice processing D1 Have all the Invoices been duly authorized by the Director- Operation & forwarded to the DGM-Finance at HO for accounting ? D2 Has the receipt register been duly signed by the DGM- Finance, as an acknowledgement of the invoices and the manual vouchers received from the factory ? D3 Have all the purchase voucher parked in the Accounting system by the Accounts- Executive been duly reviewed and authorized for posting by the DGM- Finance ? D4 Have services actually been rendered before invoice processing ? D5 Have all the invoices posted in the system been defaced by the stamping the invoices ? D6 Have the necessary provisions been made in the books of accounts for SRNs against which invoices have not been received ? D7 Has a reconciliation between the CENVAT balance, as per books of accounts & the balance as per Excise records been performed & reviewed on a monthly basis ? 15
    • Key Controls S No Particulars Yes No E Disbursement E1 Have all payment vouchers been reviewed and authorized by the DGM- Finance before disbursement of cheques ? E2 Have all cheques been for vendor payments been signed by the authorized personnel as per the DOA matrix ? E3 Has the receipt register been duly signed by the DGM- Finance, as an acknowledgement of the manual payment vouchers and cheque payment list, received from the factory ? F Vendors advances & reconciliations F1 Have all the vendor advances been duly authorized as per DOA matrix ? F2 Have all the vendor advance journals posted been reviewed by the DGM- Finance ? F3 Has vendor ageing analysis been performed and duly reviewed and documented ? F4 Has balance confirmation for all the vendors been circulated, properly reconciled and reviewed by appropriate personnel ? 16
    • This material contains general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). Accordingly, the information in this material is not intended to constitute accounting, tax, legal, investment, consulting, or other professional advice or services. The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser. None of Vox and Vive Consultancy Services Private Limited, its member firms, or its and their respective affiliates shall be responsible for any loss whatsoever sustained by any person who relies on this material and the information contained herein.