ERP Procurement Cycle

ERP Procurement goes through eight different steps, before an order cycle is complete.

1. Determination of Requirements
The material requirements are identified by the user departments or material planning & control. The requirement passed manually to the purchasing department. [In case if you set MRP procedure for a material in the material master R/3 system will automatically generates a purchasing requisition]

2. Source Determination
Identifies the potential source of supply. This is based on a) Past Order b) existing long term purchasing requirement

3. Vendor Selection
The selection of vendors by comparing the prices of various quotations. Sending the rejection letters for the non-selected Vendors.

4. Purchase Order processing
Creating the Purchase orders by including the Vendor schedule agreements and contracts

5. PO Monitoring
Sending the reminders to Vendors in a pre defined intervals

6. Goods Receipt & Inventory Management
Confirming the receipts of the Goods. Compare the Goods receipts quantities with the PO quantities. Inform the limit over or under deliveries of order goods.

7. Invoice Verification
Invoices are checked for accuracy of prices and contents. Noting of quantity and price variances based on purchase order & goods receipt data.

8. Payment processing
Find accounting for vendor payments