erp 101: procurement - link your vendors and purchase part via erp
TRANSCRIPT
ERP 101Purchasing and Vendor ControlDavid BushSenior Manufacturing Consultant,Rootstock
The ERP 101 Webinar SeriesDate 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
Meet Our SpeakerDavid BushSenior Manufacturing Consultant, Rootstock• 30+ years of manufacturing and MRP/ERP
systems experience• Previously at General Microcircuits,
Consona Corporation, Relevant Business Systems, Inc
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
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
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.
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
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.
Components of the Procurement Database
The Procurement Database has three components• The Vendor Master Records• The Purchase Item Master Records• The Item/Vendor Record
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.
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.
The Item/Vendor Record
The Item/Vendor record includes:• Vendor’s unique part number.• Vendor’s price• Vendor’s unit of measure
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.
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.
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
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…..
The ERP 101 Webinar SeriesDate 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