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PO0100 P/O and Receiving Purchase Order Processing 1


Purchase Order Processing


Application Overview

The Purchase Order Processing application allows the entry of purchase orders.  Once entered, purchase orders may later be modified, canceled or printed out on the Purchase Order Edit List.  Closed orders may be purged from the file and blanket orders may have releases issued against them.  The purpose and function of each of these features is discussed below.  Refer to The Purchase Order Cycle in the Package Overview for supplemental information. 

Purchase Orders

A purchase order is a formal request for the delivery of merchandise or services.  It is also a written contract that itemizes what should be delivered, how much it should cost, where it should be delivered, how it should be shipped, what the payment terms are, etc.  This information is printed on a purchase order form by means of the Print Purchase Orders application and is then sent to the vendor.  A printed purchase order is a formal commitment to accept delivery of and pay for the goods or services that it lists (except in the case of blanket orders).

The data entered on a purchase order is of two basic types:  that which is of interest to the vendor and that which is of purely internal interest.  The vendor needs to know what you want,  where you want it shipped and when it is supposed to be delivered, for instance.  The company needs to keep track of the asset or expense accounts that are affected by the purchase, what job the merchandise or services are for, where the merchandise should be transferred once it is received and who should be notified in the event of any problems that arise during receiving or accounts payable voucher entry.  Both types of data are entered on the purchase order and are retained until the order is physically purged from the file.

Purchase Order Types

There are four purchase order types.  Both kinds of data are entered on the purchase order regardless of its type.  The most common purchase order type is called the normal type.  On such purchase orders you simply list what you want to order, print the data on a purchase order form and send it to the vendor.  The vendor will then ship you merchandise or deliver services on the basis of the order.

The second type is the drop shipment purchase order.  This is an order which is to be delivered to one of your customers directly by the vendor.  Except for this difference, it is exactly the same as a normal order.

Another purchase order type is called the blanket type.  Like a normal order, a blanket order lists goods and services to be delivered.  A blanket order, however, is not a true order.  It is, instead, merely an agreement to purchase specific goods and services over a period of time.

Each purchase that is made of items listed on a blanket order is referred to as a release.  This is the fourth purchase order type.  A release is very similar to a normal purchase order except that it references the blanket order against which it is released and it is allowed to specify only those items that were included on the blanket order.

Adding Purchase Orders

 Purchase orders are entered on two screens.  The first screen accepts the entry of general order information such as the vendor number, buyer, shipping destination and terms.  The program validates the data as it is entered.  For instance, the vendor number that is entered must be that of a vendor that has been defined in the Vendor file.  If this condition is not satisfied the entry is disallowed and a message displays explaining why.  You may enter normal and blanket purchase orders in this manner.  The general information on the first screen is sometimes referred to as the purchase order header.  You then advance to a second screen upon which specific items or services are ordered.  One screen full of data is required to described each item on the order.  Each of these items is referred to as a line item since it is a single line on the purchase order and it pertains to a particular item.  The data required to describe a line item includes the item number, unit cost, quantity ordered and request date.  There may be up to 999 line items on a single purchase order.

Changing Purchase Orders

The change mode allows you to change, within limits, informa­tion on purchase orders.  If changes occur after the purchase order is printed, there are certain changes that the vendor needs to be informed of.  For instance, if an additional item is added to the order or if the quantity of an item on the order changes, it would be pointless to merely make the changes without notifying the vendor.  Consequently, changes of this nature trigger the printing of change orders.  A change order lists the original order plus the changes.  Change orders, like original orders, are printed by means of the Print Purchase Orders application.

Cancel Purchase Orders

Just as you cannot arbitrarily change an active purchase order without notifying the vendor, you cannot delete one unless you first cancel it and inform the vendor of the cancellation.  The Cancel Purchase Orders function provides you with the ability to cancel orders.  The package sees to it that a cancellation order is later printed through the Print Purchase Orders applications.  Once the cancellation order has been printed, the status of the purchase order will automatically be set to X (canceled) and the order will then be eligible for deletion.

Closed orders, (those which have been fully received and invoiced and which have had their order status set to C), and canceled orders may be deleted by means of the Purge Closed Purchase Orders application.  This application optionally allows the deletion of orders which have not been formally closed (have not had their order status changed to C), but which are eligible to be closed.   It also allows the deletion of disapproved orders that were never printed.

During the purge process, the program posts historical information about the order to the Vendor file and the Purchase Line History file.  This information is later accessed to produce the Vendor Performance Analysis Report and the Purchase Line History Report.

Copy PO Function

 When users press F3, they may create a PO by copying from an existing PO.  Once the PO is copied, the user will be in the change mode to make further changes if necessary.  In addition, this PO Copy function has been improved to support copying the comments and notes.

Printing the Edit List

 The final major function in this application is the Purchase Order Edit List.  This function enables you to print for internal use the information entered on the purchase orders.  The report accommodates a variety of range parameters.  For instance, you can specify which purchase order types and statuses are to be included; which vendor's orders, which buyer's orders and which shipping destina­tion's orders should be included (one or all in each case); a range of purchase order dates; and a range of purchase order numbers.  Con­sequently you can evaluate the purchase orders that are on file from a number of different viewpoints.  This makes the edit list useful as a tool for management, purchasing and even finance.

Create PO by Sales History

 The F3 key has been enabled in the P/O Line Item Screen “1. Line No” field.  Pressing the F3 key will provide up to two years of sales history breakdown by month, to assist the buyer with purchasing, in a popup window that prompts for the following selection criteria:

·                     Product Categories

·                     User Defined Codes

·                     Buyer Codes

·                     For Qty Available Less Than

·                     Show Item Qty on Order > 0

·                     Only Show Qty Available < Re-Order Level

·                     (Qty Avail/Last Year Usage) Less Than

·                     (Qty Avail/YTD Qty Usage) Less Than

 Based on the criteria the user provides, a list of items will be displayed in the next list window.  In the list window, as each item is highlighted, the details of sales/usage history of that item will be displayed.  In addition, the user can drill down to stock status inquiry and further drill down to many other functions to obtain more details of this item.  The information provided will assist the buyer with determining how many to purchase for each item.  The buyer can simply indicate how many to order in the list window.  Once the user is done editing the list window, they can simply exit by using the ESC key.  The system will create the PO line items based on the quantity the user indicated in the list window.


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