Purchasing and receiving

A cement business buys materials such as clinker, gypsum, fly ash and packing bags, along with services and spares. Demand starts as Requisitions with requested and needed-by dates, product units and the receiving warehouse. A requisition is operational demand and carries no spending authority of its own. The Purchasing Manager converts approved requisition lines into purchase orders for a supplier, in a stated currency and exchange rate, with the buyer named on the order.

Each purchase order keeps its original approved total, the cumulative gross increases from later amendments, the current total and the basis the approval covered. An amendment that raises the order beyond that basis goes back for approval, so a series of small increases cannot get past the approver.

• Approve before sending. A purchase order moves from Submitted to Approved through a purchase approval decision by the Finance Manager, who is independent of the order’s buyer. Only then is it Sent to the supplier.
• Accept receipts in tranches. goods receipts record what arrived and when. Receipt acceptances then accept or reject portions of each receipt line, and the Warehouse Manager confirms each tranche before it posts with its own stock event. The arrival record does not change as stock is later moved or used.
• Match bills to accepted quantity. supplier invoice lines are matched to accepted receipt lines through match exceptions, which reserve and consume receipt quantity and value once and show the variance in functional currency.

Agree the supplier master and how changes to it are approved through master changes, including restricted supplier bank details in supplier bank accounts that need independent finance confirmation. Agree purchase approval limits and who covers an approver during leave through authority delegations. Decide who confirms receipt acceptance, how rejected quantity is returned, and the variance at which a bill is held. Set up tax codes for recoverable and non-recoverable purchases.

A truck of gypsum arrives against an approved purchase order. The Warehouse Operator records the receipt with the arrived quantity and evidence. Part of the load is wet, so the receipt line is accepted in two tranches: one accepted portion and one rejected portion, each confirmed separately. The accepted portion posts to stock and to goods received not invoiced. The rejected portion stays on the receipt line for a supplier return.

The supplier’s bill then arrives for the full ordered quantity. The match covers only the accepted quantity, and the variance is visible to the Accountant before the bill can be approved. The bill waits as an exception until the supplier issues a credit or the variance is approved.

During the pilot, try to match the same accepted receipt line to a second bill. The second match should be refused because the quantity has already been consumed.

• Purchase orders awaiting approval — submitted orders with supplier, current total and buyer, waiting for the approver.
• Goods receipts pending review — arrivals waiting for tranche acceptance at each warehouse.

• Purchase to payment: From requisition through receipt acceptance and bill matching to a released payment.
• Return to disposition: Send rejected or surplus material back to the supplier.

Map your supplier data before the first import.