Procurement Cycle: - Simple Explanation
For Video Explanation, please go to YouTube- Studyuuu SAPMM
Requirements:
Procurement cycle always starts with the requirements
of the company and based on that next process will starts.
if we are starting any new business or Manufacturing
industry, then first we will think about requirements like is this machine
really required or is it helpful for production.
Eg: What is required to start- Machining tools,
cutting tools, brushing tools'
Funds related to Equipment- Capital cost- which will
be based on physical equipment
Gathering of all requirements and spend will be done
in the first phase of procurement cycle.
DOA- Spend Approvals:
Cost will be decided by the company and higher or
lower prices should be approved by stakeholders (Clients)
Any rejection/Approval process will be done in this
phase.
Suppliers Selection:
Once the spend is approved/ rejected then next phase
will be supplier selection
RFQ process will help to find the correct suppliers
with less cost and remaining terms as per the company.
Criteria:
Price/Payment terms/Lead time
Supplier rejection/Acceptance will be done in this
phase- RFQ process helps to accept or reject the supplier.
RFQ:
Normally sourcing will do all these activities,
whereas buyer will create PO based on vendor selected in RFQ process.
For full RFQ process- kindly go through --studyuuu.com
and search for RFQ
Evaluation:
Maximum of 3 vendor to send for RFQ process
Mention deadline for quotation and evaluate the terms
like price/net terms/lead time
System automatically calculates all the conditions and
gives the correct supplier to procure goods.
Send the rejection or approval to vendor
Contract/PO:
Based on the selection from vendor- we need to create
the contract/PO
PO/Contract should be created based on the quotation
from supplier and depends on the requirements we need to decide Contract/PO.
Net terms/Lead time/Price needs to be updated as per
the quote provided by vendor at the time of vendor selection
Order Delivery/Follow Up:
Once PO is created then PO copy should be shared to
vendor/Supplier
Delivery follow up should be done with supplier.
Any delay/shipping problems needs to be discussed with
vendor.
We should ensure shipping takes place very safely
without any delays.
Goods receipt:
Once the delivery is done, then GR needs to be posted
with respect to the quantity received.
Normally plant-Stakeholder persons will be posting GR
Any defect/damaged quantity needs to be rejected from
the vendor and appropriate action should be taken care by buyer.
Communication takes place between stakeholders and
buyers regarding this shipment.
Invoice receipt:
Once GR is done, Invoice should be posted with respect
to GR
Invoice will be sent by vendor to APAY team in every
company, depends on the tools you were using they need to post in respective
PO.
3-Way Match:
3- way match will be for material
PO/Goods receipt/Invoice receipt
Price and quantity should be seen in PO for
verification
Goods receipt: Quantity will be main issue/ should be
equal to PO.
Invoice receipt: Price in invoice should be equal to
PO price.
2-Way match:
2- Way match will be for service
PO/IR
PO price needs to be checked with invoice.
For Video Explanation, please go to YouTube- Studyuuu SAPMM
For this web site, you will see our account, remember to go through this info. punaises de lit 93
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