P.O.Manager

Expenditure cycle: P.O. Manager

P.O. Manager is the application developed by RDS to manage the entire purchasing cycle and optimize the flow of information both inside and outside the company. This module gives the purchasing department and the buyers all the information they need to decide from whom and how to order.

P.O. Manager can communicate with other sub-systems in order to obtain analyses that range from specific issues regarding purchasing and inventory to more general situations concerning the "purpose of the expense" (cost centers, orders, projects), budget availability, or the financial commitment represented by outstanding orders.

P.O. Manager ensures that all the stages in the purchasing cycle are covered in a complete and integrated fashion, starting from purchase requisitions that can be entered directly at the terminals or generated automatically from the requirements planning stage.

The process then extends to the complete management of orders placed with suppliers (contracts, open orders, delivery requests, price agreements, order changes), price lists, incoming goods, accounting recognition, matching of invoices and the update of the general ledger and management accounts.

The features of the module are integrated with the entire system to ensure that transactions generated by the system update other subsystems in real time. The inventory movement and accounting modules are updated automatically when goods or other assets are received, so costs or capital expenditure are allocated correctly according to the nature and purpose of the expenditure.

Additional guidelines for the materials master file

The materials master file contains a series of guidelines to define the purchasing procedures. These include:

The purchasing policy, which may be either spot or linked automatically to minimum stock and re-order levels for each warehouse.

Purchase requisition procedures including any need for authorization and allocation to buyers.

The incoming goods procedures which include indicating the need for quality control inspections.

Summarization codes for statistical purposes.

Grouping codes by price list.

Grouping codes to identify the cost or fixed asset accounts.

Proposed allocation to cost or fixed asset accounts.

Additional guidelines for the suppliers master file

The suppliers’ master file contains a set of guidelines to define the purchasing procedures. These include:

Warehouses, if the supplier is a subcontractor or a depot, so that the various stages of processing can be booked in and out automatically.

Secondary addresses for delivery purposes.

Summarization codes for statistical purposes.

Grouping codes by price list.

Workflow

The P.O. Manager module administers the expenditure cycle of the company via a settings-driven workflow which assigns authorized processes to each department (depending on the type of expenditure).

The expenditure cycle within a company involves the following processes:

Purchase requisitions

Authorization of purchase requisitions

Allocation of purchase requisitions

Invitations to bid (requests)

Contracts

Orders

Delivery requests

Incoming goods

Services rendered

Quality control

Invoice matching

For each department and type of expenditure, it is possible to control the purchasing process through settings that customize the workflow.

Purchase price lists

This feature allows the company to:

Manage price lists in foreign currencies

Manage several price lists simultaneously

Manage specific price lists with special net prices

Record data related to price differences and/or discounts with respect to a standard price list

Manage the price lists by groups of items

Manage the price lists by groups of suppliers

Manage the price lists by supplier

All the functions of P.O. Manager are linked by settings to this price list procedure, in order to obtain suggested prices or discounts.

Purchase requisitions

The purchase requisitions module can be activated as an option within the workflow that manages the company's expenditure cycle by department and type of expense.

The purchase requisition can be generated either manually or automatically via the processing of inventory requirements.

The requisitions can be input by quantity or by value and may already contain the accounting allocation by the nature and purpose of the expenditure, in which case the system can verify compliance with the expenditure budget.

The requisitions can then be approved by authorized signatories and subsequently allocated to the buyers.

Users can view lists of purchase requisitions by warehouse, person responsible for the purchase requisition and item. These lists highlight the current status of the various requisitions:

Blocked purchase requisitions

Purchase requisitions to be authorized.

Authorized purchase requisitions

Purchase requisitions to be allocated.

Purchase requisitions allocated to buyers.

Purchase requisitions processed by obtaining bids.

Purchase requisitions processed under existing contracts.

Purchase requisitions processed by issuing purchase orders.

Invitations to bid

When faced with a purchase requisition - whether processed by the system or not - the system can handle several requests for bids to various suppliers. The system proposes the usual suppliers based on previous bids received for the items concerned.

By using this module, the user can administer bids received and award the business to the winning bid by issuing a contract or an order. Users can view lists of invitations to bid by warehouse, supplier and item. These lists highlight the current status of the various requests:

Request awaiting reply

Request with bid

Accepted bid

Bid processed by issuing a purchase contract

Bid processed by issuing a purchase order

Purchase contracts

The system handles contracts and open orders with suppliers either directly or with reference to a processed purchase requisition or a processed bid.

This module enables users to manage contracts separately from the nature or purpose of the expense, by storing information on bids such as quantities, prices and discounts. Users can view lists of contracts by warehouse, supplier and item. These lists highlight the current status of the various open orders.

Purchase orders

This module enables the buyer to issue orders as a result of processing the related purchase requisitions, bids or contracts or even by direct input of the order information. If the buyer uses the automated processes (purchase requisitions, bids, or contracts), the system suggests the items and their prices, to reduce the time and effort involved.

The order of the items listed determines the delivery schedule required, which helps the supplier to optimize the related production plans. Users can view lists of orders by warehouse, supplier and item. These lists highlight the current status of the various orders.

Commitments to suppliers can be analyzed by the nature and purpose of the expenditures. This allows the Accounting Manager to project costs and capital expenditures and verify compliance with the related budgets.

Incoming goods

This module launches all the procedures related to determining material availability, booking materials into inventory and cost recognition depending on whether the goods must be allocated to a cost center, a sales order or capital investment.

The management of incoming goods also extends to services received; in which case the system can process orders on a percentage basis (based on progress reports). In the case of materials handled via quality control, the booking procedures do not update available inventory, but rather a temporary account that is closed out following the testing process.

Incoming goods can close out purchase requisitions, contracts or orders, or they can be entered into the system directly.

If incoming goods use the automated processes (purchase req., bids, contracts, orders), the system proposes the items and their quantities to reduce the time and effort involved.

Users can view lists of goods or services received by warehouse, supplier and item.

If not allocated to inventory, amounts booked in can be managed by the nature and purpose of the expenditure, thus allowing the Accounting Manager to project costs or capital expenditure and verify compliance with the related budgets.

Quality control

By using specific flags within the materials master file, it is possible to establish which materials must undergo quality control or testing. Upon arrival, the system separates those products that require testing and those that do not using an in-transit account (inventory awaiting testing).

Once the technical activities required to check the products have been performed, the materials are called up and recorded as quantities accepted. The inventory transactions related to this operation close out the in-transit account (inventory that is awaiting testing) and recognize the materials as available inventory.

Physical location

Inventory can be subdivided into physical areas (shelves, aisles, etc.). With this function, calling up the goods rejection note can identify the physical location and related quantities of each product. Therefore, the inventories are managed by reference to their physical location only. The issue of a goods rejection note relieves inventory of the items returned to the supplier.

This note can be obtained by:

Calling up the goods rejection note:

This function enables users to call up one or more goods rejection notes to confirm the quantity of product to be returned to the supplier.

Direct issue of the note:

This function allows the user to enter a completely new rejection note for products to be returned to the supplier.

Even this type of return uses the procedural links envisaged for the other type of return, with the only exception being the reference to the goods rejection note.

Invoice matching

This function enables the user to perform an analytical check of all invoices sent by suppliers with respect to the deliveries and services rendered. The invoice matching function requires the supplier and the number, date and value of the invoice to be input. The system identifies the goods and services received but not yet invoiced, the operator then specifies the notes to be recorded and the system provides all the values necessary for the check.

The invoice matching phase updates the accounting records and the management control function, showing whether or not amounts due should be paid. The system helps the operator by identifying any mistakes made by the supplier in terms of prices or quantity, or if the material did not pass quality control.

This module also handles invoices for which goods rejection notes have not yet been received, as well as returns to suppliers.

Integration with Treasury and Management Control

The P.O. Manager module is integrated with the Financial Manager RDS management control system and, by inputting suitable settings, it can update:

Commitments arising from purchase requisitions.

Commitments arising from purchase orders.

Knowledge of commitments to suppliers enables Accounting Managers to forecast costs with greater accuracy than can be obtained directly from the computer at any particular point in time.

Knowledge of commitments to suppliers enables Treasurers to forecast financial commitments from the due dates of orders not yet covered by goods rejection notes.

Such information may be useful to complete the forecasting of financial commitments included in the treasury module that is integrated with the accounting records.

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