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Part 1: Procurement
DPR105: MGMT INFO SYSTEMS
Instructor: Tom MatysMagal and Word ! Essentials of Business Processes and
I...
Magal and Word ! Essentials of Business Processes and
Information Systems | © 2009 2
Lesson Goals / Agenda
•  Procurement ...
Magal and Word ! Essentials of Business Processes and
Information Systems | © 2009 3
Procurement
You arehere
Magal and Word ! Essentials of Business Processes and
Information Systems | © 2009 4
Procurement is the process of getting...
Magal and Word ! Essentials of Business Processes and
Information Systems | © 2009 5
…..is a subset, or one of many
respon...
Understanding the difference between……
Magal and Word ! Essentials of Business Processes and
Information Systems | © 2009 ...
The Traditional Supply
Chain
Magal and Word ! Essentials of Business Processes and Information Systems | ©
2009
7
*Inheren...
Magal and Word ! Essentials of Business Processes and
Information Systems | © 2009 8
Lead Time:
The time between when a ra...
Magal and Word ! Essentials of Business Processes and
Information Systems | © 2009 9
The Basic Procurement Process
ç cros...
Document flow (Audit Trail)
1.  Purchase Requisition (optional)
2.  Purchase Order
3.  Packing List
4.  Goods Receipt Docu...
Magal and Word ! Essentials of Business Processes and
Information Systems | © 2009 11
PROCESS
Function
Magal and Word ! Essentials of Business Processes and
Information Systems | © 2009 12
PROCESS
Function
Magal and Word ! Essentials of Business Processes and
Information Systems | © 2009 13
PROCESS
Function
Magal and Word ! Essentials of Business Processes and
Information Systems | © 2009 14
PROCESS
Function
Magal and Word ! Essentials of Business Processes and
Information Systems | © 2009 15
PROCESS
Function
B2B
The financial terms, agreement, and/
or contract between a buying company
and a vendor.
Magal and Word ! Essentials of...
Magal and Word ! Essentials of Business Processes and
Information Systems | © 2009 17
PROCESS
Function
Financial Impact
—  Income Statement
Revenue from sales
Cost of goods sold
Net Income
—  Balance Sheet
Assets
Liabilitie...
Revenue
For a company, this is the total amount of
money received by the company for goods sold
or services provided durin...
Financial Impact on balance sheet and income statements
Example: Procure $500 in materials.
20
Process step B/S I/S
Purcha...
Magal and Word ! Essentials of Business Processes and
Information Systems | © 2009 21
Process step B/S I/S
Purchase requis...
Things to know
— What are the Procurement steps?
— What is the purpose of each step?
— Who is involved in each step?
—...
Questions
Magal and Word ! Essentials of Business Processes and
Information Systems | © 2009 23
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Procurement in Business

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Procurement in Business

  1. 1. Part 1: Procurement DPR105: MGMT INFO SYSTEMS Instructor: Tom MatysMagal and Word ! Essentials of Business Processes and Information Systems | © 2009 1
  2. 2. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 2 Lesson Goals / Agenda •  Procurement in ERP •  SCM (Supply Chain Management) •  SCM’s vs. Procurement •  Why timing is critical to Procurement •  Raw material versus finished product •  Procurement Business functions & Processes •  Document Flow
  3. 3. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 3 Procurement You arehere
  4. 4. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 4 Procurement is the process of getting the goods and/or services your company needs to fulfill its business model. Buying/Purchasing
  5. 5. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 5 …..is a subset, or one of many responsibilities faced within the procurement process/cycle. …..it includes all the activities that must take place to get the right product into the right consumer’s hands in the right quantity and at the right time. SCM Operational activity
  6. 6. Understanding the difference between…… Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 6 Raw material Finished Product
  7. 7. The Traditional Supply Chain Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 7 *Inherent time lags in the chain cause problems SCM (Supply Chain Management
  8. 8. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 8 Lead Time: The time between when a raw material is ordered and when it is goods receipt at the receiving dock. *Any lag times in the chain causes issues Create Purchase Order Goods Receipt Lead Time
  9. 9. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 9 The Basic Procurement Process ç cross functionality è ç Document flow è
  10. 10. Document flow (Audit Trail) 1.  Purchase Requisition (optional) 2.  Purchase Order 3.  Packing List 4.  Goods Receipt Document 5.  Vender Invoice 6.  Send Payment Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 10
  11. 11. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 11 PROCESS Function
  12. 12. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 12 PROCESS Function
  13. 13. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 13 PROCESS Function
  14. 14. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 14 PROCESS Function
  15. 15. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 15 PROCESS Function
  16. 16. B2B The financial terms, agreement, and/ or contract between a buying company and a vendor. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 16
  17. 17. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 17 PROCESS Function
  18. 18. Financial Impact —  Income Statement Revenue from sales Cost of goods sold Net Income —  Balance Sheet Assets Liabilities Equity 18
  19. 19. Revenue For a company, this is the total amount of money received by the company for goods sold or services provided during a certain time period. It also includes all net sales, exchange of assets; interest and any other increase in owner's equity and is calculated before any expenses are subtracted. 19
  20. 20. Financial Impact on balance sheet and income statements Example: Procure $500 in materials. 20 Process step B/S I/S Purchase requisition Purchase order Goods receipt Vendor Invoice receipt Vendor payment Thinking in terms of the positive and negative financial events in a company during any process.
  21. 21. Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 21 Process step B/S I/S Purchase requisition Purchase order Goods receipt Inventory Vendor Invoice receipt Accounts Payable Vendor payment (Cash) Financial Impact on balance sheet and income statements Example: Procure $500 in materials.
  22. 22. Things to know — What are the Procurement steps? — What is the purpose of each step? — Who is involved in each step? — What is the document flow? Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 22
  23. 23. Questions Magal and Word ! Essentials of Business Processes and Information Systems | © 2009 23

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