In this Microsoft Dynamics AX Training Lesson, we will understand the purchase business process.

In the previous training lessons, we have created two items – Bottle and Can which we will now use in our work.

Let’s assume that our company needs 5,000 Bottles Red 0.5 and 3,000 Cans Standard Black. The company’s Purchase Manager receives the information from one of the company managers to buy these items from the Big Bottle vendor.

The Purchase Manager creates a new purchase order with two lines, calls the vendor, and agrees order details – item quantity, delivery date, price, etc.

The Purchase Manager enters the agreed information into the purchase order. Then the Purchase Manager needs to confirm the order details and print the Confirmation document. This document is a guarantee that our company and the vendor have a preconcert. The Purchase Manager sends the Confirmation document to the supplier via a fax or an e-mail.

After that, the warehouse workers (on the Big Bottle company side) load a truck with necessary items. A truck driver starts out.

The Purchase Manager typically receives phone calls from the truck driver asking for a delivery. The Purchase Manager asks the driver for any purchase order numbers listed in his paperwork and finds the appropriate purchase order in the system.

The Purchase Manager uses the warehouse management system to determine a time slot, dock door, and duration for the delivery. The system evaluates all items on the purchase orders and determines what receiving door would result in the least travel time for the putaway.

The Purchase Manager accepts the desires dock door and date.

The Purchase Manager provides the truck driver with the dock door number, date and time of receipt.

When the truck arrives to the gate, a security guard logs that the truck is on site.

When the truck driver arrives to the warehouse office, the Purchase Manager physically collects the receiving paperwork from the truck driver. The Purchase Manager opens the purchase orders in the Warehouse Management System (WMS) and compares line item quantities in the truck driver’s paperwork with the quantities displayed in the WMS. Any differences are entered into the WMS.  (These totals should normally remain unchanged from the purchase order totals displayed, and will only vary when the supplier does not ship complete or, rarely, if there is a substitution.)

Once the expected quantities are entered, the WMS goes through putaway routines to determine where to store each inbound pallet. Locations are printed on pallet tags.

As soon as the Purchase Manager makes sure that the order information matches the truck driver’s paperwork, the following documents are printed and given to the Receiving Manager:

  • Pallet Tags, (one for each pallet expected)
  • Lumper’s TI-HI report. A Lumper is a non-employee hired by a truck driver to help unload a trailer. The TI-HI report refers to the number of boxes/cartons stored in one layer (or tier of a pallet -TI) and the number of layers stacked on a pallet (HI).
  • Receiver. A document listing each pallet expected with item quantity.

The Receiving Manager physically examines the arriving goods, affixes pallet tags, and validates the quantities on the Receiver.

When finished, the Receiving Manager returns the Receiver and any leftover labels to the Purchase Manager.

The Purchase Manager stamps the truck driver’s paperwork and releases him.

The Purchase Manager then opens the Warehouse Management System again, opens the data entry function, and enters any quantity adjustments, code dates, etc. noted on the Receiver, and voids any leftover pallet tags.

In the warehouse, the forklift truck driver moves the pallets off the receiving dock and takes them to the location printed on a pallet tag. If for any reason he cannot put a product away, he takes the pallet to a special area sometimes called a twilight zone. Inventory management personnel will handle the problem from there.

The security gate logs trucks off the site.

When items are received, the Purchase Manager posts the Packing slip – this means that the items are already in the company warehouse (company’s property) and we can use these items.

In the last step, the Purchase Manager confirms that our company must pay to the Big Bottle company. For this purpose, the Invoice document exists. The Purchase Manager receives an invoice from the Big Bottle Sales Manager and posts one. This process creates a ledger transaction – an Inventory account is debited (increased), Accounts Payable account is credited (also increased). To understand a financial transaction I recommend you read this training.

There is still one more step exist is the payment process. But this process does not belong to the purchase business process. Even more, the payment is out of the Trade and Logistics scope. Payment will be studied in the Microsoft Dynamics AX (Axapta) Financial training.

Summary

In this training lesson, we have learnt the purchase business process. Let’s review the key personas in this process:

  • Purchase manager
  • Receiving manager
  • Truck driver
  • Forklift truck driver

The purchase order flow is as follows:

  1. Create
  2. Confirm
  3. Arrive
  4. Register (PutAway)
  5. Packing slip (company property)
  6. Invoice (must pay)

In the next training lessons, we will learn how the purchase process is implemented in Microsoft Dynamics AX. Also, we will understand that not all steps are implemented on an adequate level.

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