Purchase Order Entry

Version: As of version 16.03

Introduction

Purchase Orders define the items or services to be provided by a single Vendor, along with the appropriate Payment Terms, delivery dates, item descriptions, quantities, Ship Via Methods, and all other obligations and conditions. In addition, it provides benefits such as order tracking, pricing agreements, audit trails, inventory management, and invoice checking.

Security and Configuration

Security / Permissions

The following are required for this process. Note: Additional security may be required. See your system administrator for security access.

Purchasing menu
Purchase orders – access order entry
Purchase orders – change pricing unit
Purchase orders – change purchase unit
Purchase orders – edit purchase order

Configuration

Prior to creating a purchase order in DEACOM, several pieces of master data, including pricing rules, will need to be setup. In most cases, companies will have already completed these set up steps during the implementation process. The required configuration setups are indicated below.

Chart of accounts - the accounts should be in the system at this point even though none will get hit during the order entry process. An AP Account is needed for an order to be saved.
Vendors must be entered into the system and validated.
Purchase Terms must be populated and are defaulted directly from the vendor record.
Facilities - Each purchase order is going to need to have a facility linked to the order for it to be saved
Ship To – These locations should be setup prior to entry of purchase orders (Usually the same as the facility).
Items - Every purchase order needs an item added to it and that item must have a purchase to account.
Freight Types/Ship Via - These should be set up before purchase order entry and can come directly from the vendor record.
"Max PO Dollars 1-3" - Set via Purchasing Options, these fields have security associated with them and can be used to limit the maximum dollar amount a Purchase Order may be created for.

Related Processes

Procedure

Note: If converting an approved requisition to a purchase order, confirm the existing information, including pricing, on the requisition and then skip to step 8. in the section below.

Entering a new Purchase Order

Navigate to Purchasing > Order Entry.
Select appropriate Vendor. Notes: 1. Other header fields will be automatically populated after selecting a Vendor, but can be over-ridden by the user if desired. For additional information on the fields available to the Purchase Order header and how they are used during order entry, see the Purchasing > Order Entry encyclopedia page. 2. Version 16.02 introduced Vendor Facility specific defaults allow users to set Facility specific order defaults by Vendor. If a Facility is selected with a matching Vendor Facility record, the defaults specified on the Vendor Facility record, and not the order defaults on the Vendor record, will be used during order creation. Users may change the defaults if desired.
On the Misc 1 tab, confirm that the "Ship-to" and "Search" fields are correct; if they are incorrect they may be changed for this order. These fields can be overwritten up until the order is received.
On the Misc 2 tab, confirm the selected AP account is correct.
Click the "Add" button to begin adding parts to the Purchase Order and use the Part Number search box to locate the part.
Enter the quantity for the part and confirm the price shown is correct, or change if the price is incorrect.
Click "Save" and "Exit" to add the part to the order.
Navigate to the Dates tab and fill in the applicable date fields. Note that "Due to dock" is the date that is used to drive MRP and must be filled in if using MRP. For an Order Type of Pricing, the user may also set the Pricing Order Based On.
If adding more lines to the Purchase Order, click the "Next" button to save the first line and bring up a blank second line, or continuously click "Add" to add more lines.
When finished adding lines to the Purchase Order, click the "Save" and "Exit" buttons to commit the changes and close the Purchase Order lines form.
On the Purchase Order header, review the details by checking the total order amount. Similar to checking the extensions on the Purchase Order lines, a review of the total order amount can detect errors in order entry or inconsistent pricing. Click the "Save" button to save the order and generate a Purchase Order number.

Additional Information

Entering Credit Memos

Credit memos are used to satisfy two different situations:

Situations where material will be removed from your inventory, returned to the vendor, and a credit will be received.
Situations where inventory will be kept, or otherwise disposed, and the only adjustment needed in the system is the registering of a credit owed by the vendor.

In both cases, a purchase order with a negative quantity and price is entered to trigger the process.

Note: For the first situation described above, members of the inventory and/or purchasing teams will need to be involved since inventory is being adjusted. In the second situation, AP personnel can handle the process since it mirrors the way Expense Purchase Orders are handled by using the “Invoice/Pre-Pay” button on the Purchase Order header.

Entering a Credit Memo and returning material

Purchasing > Order Entry.
Enter the vendor that the material is being returned to. Make sure that the facility is where the inventory current resides. For example, if the material has failed QC and has been quarantined in a non-production facility, be sure to specify that non-production facility on the PO. Ensure that the term codes are correct on the order.
Click the “Add” button to display the "Edit Purchase Order Line" form.
Specify the part number being returned, the charge to account (the inventory account where the inventory is currently located) and the quantity, in a negative number. Enter the price that the vendor is allowing you for the returned material. This may be the same as the price that was originally paid for the material, or may be less if the vendor deducts a percentage of the price originally paid for a restocking fee. The system requires that this be a positive number.
Important - Verify the extension and the total amount for the PO line are negative which indicates that the vendor will be issuing a credit to your account.
Important – Ensure the “Do Not Post Inventory” flag is unchecked. This flag ensures that when the material is removed from inventory the correct adjustments will be recorded.
Click the “Save” button on the "Edit Purchase Order Line" form and then the X at the top right hand of the form to return to the "Purchase Order Entry" form.
Click the “Save” button to save the PO in the system.
Purchasing > Receive. Enter the lots that are being returned to the vendor in the lots to receive lot and receive the purchase order. This process will remove the lots from stock because it’s a negative purchase order. Inventory and/or purchasing personnel would handle this step. AP personnel just needs to be aware of how the process flows.
Purchasing > Invoice. Enter a "dummy" invoice for the return to vendor. If actually receiving the check from the vendor, select the "Print check now" flag to process the payment. If the payment has not been received, the payment can be processed later through manual checks or a check run.
Once all the information has been verified, click the “Apply” button to complete the process from the AP perspective.

Entering a Credit Memo and not returning/disposing material

Purchasing > Order Entry. Enter the vendor that the material is being returned to. Make sure that the facility is where the inventory current resides. For example, if the material has failed QC and has been quarantined in a non-production facility, be sure to specify that non-production facility on the PO. Ensure that the term codes are correct on the order.
Click the “Add” button to display the "Edit Purchase Order Line" form.
Do not enter a part number. Rather, enter a description of the return rather than entering a part number to return. Also, enter the charge to account which will not be an inventory account in this case because the part is going to be adjusted out of stock. Specify the quantity being returned as a negative number and enter the price that the vendor is allowing you for the returned material. This may be the same as the price that you originally paid for the material, or may be less, if the vendor deducts a percentage of the price originally paid for a restocking fee.
Important - Verify the extension and the total amount for the PO line are negative which indicates that the vendor will be issuing a credit to your account.
Important – Ensure the “Do Not Post Inventory” flag is checked. In this case, checking the flag ensures that inventory will not be adjusted during this process.
Click the “Save” button on the Edit Purchase Order Line form and then the X at the top right hand of the form to return to the "Purchase Order Entry" form.
Check the “Invoice/Pre-pay” box on the header.
Click the “Save” button to save the PO in the system.
At this point, the system displays the "Enter Invoice Received" form.
Enter a "dummy" invoice for the return to vendor. If you have received the check from the vendor, select the "Print check now" flag to process the payment. If the payment has not been received, the payment can be processed later through manual checks or a check run.
Once you have verified the information is correct, click the “Apply” button to complete the process.

Adding freight costs to Purchase Orders

How are freight costs automatically added?

"Acct. Freight" field from the Item Master Costs tab - Configured on a per item basis, the "Acct. Freight" field is used to store the freight cost associated with the item. When that Part is added to a Purchase Order line, the "Acct. Freight" value is used to populate the "Freight Cost" field on Purchase Order line(s) containing that Part. These values are then summed and the total is populated in the "Total Freight Cost" field on the Purchase Order header's Pricing tab. If using Facility Part Cross References and/or Vendor Part Cross References and the necessary fields and flags are populated, freight from the cross reference will be used in place of the base Item Master. Note: if entering freight costs in the "Freight Cost" field on the vendor cross reference part, be sure to enter the freight in terms of the pricing unit specified on the vendor cross part.

How are freight costs manually added?

During order entry - As mentioned above, the "Freight Cost" field is populated by the Part's Item Master. If needed, this field can be manually modified. This requires the user making the modifications to have the "Purchase orders -- edit freight cost" security set to Yes. Alternatively, available in versions 15.03.017 and above, if a lump freight cost should be used for the entire order, it may be entered directly into the "Total Freight Cost" field on the PO header. This value will then be allocated across the PO lines using the logic detailed in the "Total Freight Cost" field description on the Order Entry page.
After order entry - Viewing the order via a Purchase Order report allows the use of the "Freight PO" button, which is used to select a Vendor and specify the freight amount for the selected order. This will create a new PO and allocate the freight costs to the lines of the original PO. Another option is using an Expense Purchase Order, which is created in much the same way as a regular Purchase Order, but does not require receipt. For more information, refer to Using Expense Purchase Orders. Lastly, adjustments related to freight costs may be entered on the invoice received for the Purchase Order. The process on entering adjustments is covered in Entering Vendor Invoices.

Using additional Purchase Order process options

How can users be prevented from viewing specific Purchase Orders?

Using Public vs Private Purchase Orders - A Purchase Order or Requisition may be marked as Public or Private via the selection box in the "PO Type" field located on the General tab of the Purchase Order Entry form. Only users with access to the security setting "Purchase orders -- view private" will be able to view and create Private orders. The option to mark orders as private is useful in situations where certain orders, such as those dealing with monthly rent or equity payments, should only be viewed by accounting personnel.

How can Purchase Orders be linked to other orders in the system?

Purchasing to specific areas - DEACOM provides the ability to enter orders that purchase directly to Jobs, Sales Orders, or Bill-to Companies. To use this feature, when entering a new Purchase Order, navigate to the Misc 1 tab and select the desired record from the pick list in the appropriate field.

How are order confirmations generated?

Using Print Outs - Once one or more Purchase Orders have been entered, navigating to Print Outs > Purchase Orders will display a list of all orders that have been entered and not yet printed. This display setting is by default and may be changed by clicking "Display" in the toolbar. To print one order, select the order and click "Print One", adjust the printing settings as desired then click "Print". If all orders should be printed, click "Print All". This feature is used to send a confirmation of what has been ordered so that it can be reviewed for accuracy and agreed to by the Vendor. Note that the print outs can also be generated by viewing the order via Purchasing > Order Reporting and clicking the "Print" button.

What methods can be used to plan purchasing?

Using MRP for Purchasing - MRP is a production planning and inventory control system used by companies to manage their manufacturing processes. MRP systems are designed to ensure materials are available for production and to ensure products are available for delivery to customers. In addition, MRP helps companies maintain the lowest possible material and product levels, plan manufacturing activities and manage delivery schedules. DEACOM’s MRP approach is to provide a filtered list of only those items requiring action by the user. These items include those that are purchased from outside suppliers and subassemblies that are components of other items produced internally. Refer to Understanding MRP Basics and Understanding Advanced MRP for more information.

Purchase Order Fields and Forms
Purchase Order Specific Troubleshooting