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ERP 101: Procurement - Link Your Vendors and Purchase Part via ERP

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In this 30-minute session, you will learn:

1) How ERP Procurement goes beyond ordering purchased parts for manufacturing as it controls direct, indirect and service parts.
2) How vendor information is maintained and used by ERP to help you control cost and evaluate vendor performance.
3) How procurement works hand in hand with MRP to make sure parts are available when and in the proper quantities needed.

Published in: Software
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ERP 101: Procurement - Link Your Vendors and Purchase Part via ERP

  1. 1. ERP 101 Purchasing and Vendor Control David Bush Senior Manufacturing Consultant, Rootstock
  2. 2. The ERP 101 Webinar Series Date Topic Aug 2, 2016 An Introduction to ERP for Manufacturing Aug 16, 2016 Engineering – Learn how to create Part Master Records and Bills of Material Aug 30, 2016 Engineering – Learn how Change Orders and/or Revisions ensures that ERP system data is accurate and up-to-date Oct 11, 2016 Shop Floor – Explore how ERP is used to create and maintain Work Centers, Routings and Procedures Nov 1, 2016 Shop Floor – See how scheduling the Shop Floor through ERP controls Labor and Machines Nov 29, 2016 Procurement – Link your Vendors and Purchased Parts via ERP Dec 13, 2016 MRP – Step through an overview of this vital ERP subset TBA Work Orders – The starting point of manufacturing TBA Inventory - Maintaining Accurate and Reliable Data TBA Sales – See how you can link your Customers and Products via ERP TBA Manufacturing Accounting – An overview using standard cost TBA Manufacturing Accounting – An overview using weighted cost
  3. 3. Meet Our Speaker David Bush Senior Manufacturing Consultant, Rootstock • 30+ years of manufacturing and MRP/ERP systems experience • Previously at General Microcircuits, Consona Corporation, Relevant Business Systems, Inc
  4. 4. A Quick Recap • Last 4 Webinars focused on specific manufacturing issues: – Part Numbers and BOMs define material side of production – Engineering typically defines both part numbers and BOMs – Revision and/or ECO’s make sure demands are based on current configurations – Shop Floor Control focuses on the manufacturing side of production – Work Centers and processes defined as used during manufacturing steps – Part Routings provide means for ERP to do Capacity Planning
  5. 5. Moving to Procurement • Procurement and Vendor Control support the material side of manufacturing – “Procurement’ is the act of purchasing parts for production or other areas of the company • Three types: – Direct Parts used to manufacture items • Coded as ‘Purchased’ when created in Engineering • Planned by MRP – Indirect Parts support manufacturing but not called out on BOMs • Might include lubricants, gloves, other shop-floor supplies or office supplies – ‘Service Items’, often paid by the hour, such as copy machine repairs
  6. 6. Managing Vendors in the ERP System • Vendor Control adds and maintains vendor records • Item/Vendor records link specific parts to specific vendors. • Historical Data provides means to do vendor analysis • Links to Accounts Payable allows ERP to handle 3-way matching to ensure the timely and accurate payment of invoices.
  7. 7. The Bigger Picture MRP Engine Material Demands from Sales Orders and Work Orders Purchased Item Master used by planning MRP creates suggested requisitions Manual requisitions Manual PO’s created without requisitions POs placed with vendors PO Receipts bring material to stores Conversion process turns requisitions into POs
  8. 8. Building the Procurement Database • Parts are entered into the Engineering Item Master, but, when purchased, have unique information to be entered and maintained. This calls for a Purchased Item Master record. • Vendors require their own individual records to hold information planners need to make good decisions. • When parts are purchased from a vendor or vendors, unique information about the item/vendor relationship needs to be maintained. – Pricing – Units of Measure – Lead Times – Vendor Part Numbers Let’s take a closer look at Rootstock objects to see how the ERP system maintains this information.
  9. 9. Components of the Procurement Database The Procurement Database has three components • The Vendor Master Records • The Purchase Item Master Records • The Item/Vendor Record
  10. 10. The Vendor Master • Hold specific data identifying each vendor including Vendor Number, Contact info, Currency, PO template, etc. • Addresses are used to identify where invoices are paid and where items are shipped from. • Historical information indicates item purchased from this vendor and recent POs.
  11. 11. The Purchase Item Master • Holds data uniquely required for purchasing. – Direct, Indirect and Service Items. • Generic information not tied to any specific Vendor. • Used by MRP to create accurate requisitions for direct items.
  12. 12. The Item/Vendor Record The Item/Vendor record includes: • Vendor’s unique part number. • Vendor’s price • Vendor’s unit of measure
  13. 13. Creating Purchase Orders • Order Number unique to this PO, automatically generated. • When vendor selected has item/vendor record on hand, their unique data automatically copied to PO line. • Order Status lets buyer know exactly where the PO is. Has it been accepted by the vendor? Has it been received? • Line button allows new item/vendor records to be created on the fly. • Default information comes from several related records. Purchase Commodity Code, Vendor file, Item/Vendor record, etc., and can be overwritten as needed. Once the PO has been accepted by the Vendor, the receipt transaction can take place.
  14. 14. Performing the PO Receipt • Receipt Data defaults from PO (date, quantity, location) • May be overwritten as required (note quantity) • Receipt becomes document used by Accounts Payable for 3-way match process • Automatically updates PO line to reflect partial or full receipt. We have taken a very high look at the procurement tools, but, hopefully, this has demonstrated how ERP both collects data and then uses it to help buyers perform this task.
  15. 15. The Bigger Picture Revisited MRP Engine Material Demands from Sales Orders and Work Orders Purchased Item Master used by planning MRP creates suggested requisitions Manual requisitions Manual PO’s created without requisitions POs placed with vendors PO Receipts bring material to stores Conversion process turns requisitions into POs
  16. 16. Where Do We Go From Here? We’ve covered the manufacturing (material and labor) sides of ERP, and, today, the Procurement function. Here’s what is coming: • MRP – Gathers supply and demand information to determine quantities and timing of needed material. – Creates suggested requisitions and work orders to satisfy demands. • Work Orders. – Typically created by MRP, work orders are SUPPLIES of manufactured items (subassemblies and final assemblies) needed to satisfy customer requirements. – Work Orders provide MRP and Capacity planning ‘demands’ on the system for materials and shop floor capacity. • Order Entry – Feeds the ‘demand’ side of ERP – Maintains customers, products, orders, etc. • Inventory – Maintains current balances of direct material – Provides means to issue material as needed to work orders and subcontract purchase orders. And much more…..
  17. 17. Q&A www.rootstock.com 888.524.0123 marketing@rootstock.com
  18. 18. The ERP 101 Webinar Series Date Topic Aug 2, 2016 An Introduction to ERP for Manufacturing Aug 16, 2016 Engineering – Learn how to create Part Master Records and Bills of Material Aug 30, 2016 Engineering – Learn how Change Orders and/or Revisions ensures that ERP system data is accurate and up-to-date Oct 11, 2016 Shop Floor – Explore how ERP is used to create and maintain Work Centers, Routings and Procedures Nov 1, 2016 Shop Floor – See how scheduling the Shop Floor through ERP controls Labor and Machines Nov 29, 2016 Procurement – Link your Vendors and Purchased Parts via ERP Dec 13, 2016 MRP – Step through an overview of this vital ERP subset TBA Work Orders – The starting point of manufacturing TBA Inventory - Maintaining Accurate and Reliable Data TBA Sales – See how you can link your Customers and Products via ERP TBA Manufacturing Accounting – An overview using standard cost TBA Manufacturing Accounting – An overview using weighted cost

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