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Streamline Procurement Management with SAP Business One
Businesses are under competitive pressure everyday; many businesses absorb the increasing cost ofcommodities, components, goods, and services rather than passing them totheir customers. They try to protect profitability by finding new ways to boost productivity and drive innovation in procurement processes and practices to lower costs. Slow and costly paper-based processes are replaced withefficient workflows to cut down transaction cost, eliminate errors, and reducespend.
As part of the normal purchasing process your company may utilise purchase requests and purchase quotations. In most businesses, when employees want to order supplies, they use a purchase request to alert the purchasing department about their needs. Typically, a purchase request document is used internally to indicate a need for an item. As soon as a request is made, the item can be ordered directly or vendors can be requested to provide quotations.
Procurement management is a core functionality of the SAP Business One application that enables you to automate and standardise your core activities related to purchasing. It provides support for purchasing planning, vendor selection, purchase order management, and vendor invoice payment. And it lets you do all these rapidly, with the necessary integration across business functions in accounting and warehouse management to drive success.
With SAP Business One, you can get a detailed view of your vendors and support for an integrated, centralised vendor data repository so you can make more effective purchasing decisions, identify opportunities for cost savings, and better manage supplier relationships.
You can manage and maintain supplier related activities with SAP Business One, including Vendor selection by comparing different purchase quotations, issuing purchase orders, updating inventory quantities, calculating the landed cost value of imported items, delivering goods, and handling returns and credits.
Let’s have a quick look at the purchase functionality available in SAP Business One
- Purchase Quotation – While purchasing goods/services, you tend to look out for the best price offer available. For this, you need to send an invite to the potential vendors to quote their price along with the terms & conditions- delivery date, the pricing details etc. for the materials or service. For this the vendors need to submit a purchase quotation to the company, which will include material or service details i.e. quantity, required date and vendor information. You can later compare the quotes that you have received, and finalise on the vendor that suits your purpose the best.
- Purchase request – Using the purchase request, users and employees within the organization can submit their goods or service needs and initiate the purchase process.
- Purchase order – You will need to create purchase orders for the material or service you are planning to order, and then print, mail, fax or, email them to the supplier. The PO is generally generated from the sales order so that the recommended inventory is available in the warehouse on the shipping date. The PO will update the available quantity of the ordered item in the warehouse and inform the warehouse manager the expected delivery date for the goods. You can always split the PO into multiple parts in case the goods you have ordered belong to different warehouses, and send it to the respective warehouses.
- Goods receipt purchase order – Decide whether you would like to receive deliveries at one warehouse or multiple warehouses. The goods receipts can be linked to your purchase order, in which case you have the option of changing the purchase order in case the quantity received does not match the order quantity. In case you want to return the goods to the vendor, you need to raise a goods return document, which can be created in order to partially or completely reverse the quantity and prices mentioned in the goods receipt PO.
- AP invoice – When you process a supplier invoice, the software will automatically generate these invoices and process the payments to the suppliers.
- AP credit memo – You can issue a credit memo to the supplier for returned merchandise. For this, you can even draw data from the invoice to create a credit memo.
- Landed costs – Calculate the purchase price of merchandise by allocating the various landed-cost elements (such as freight, insurance, and customs duties) to the FOB cost of each item. The actual warehouse value of merchandise updates automatically.
Material Requirements Planning
Material requirement planning is core to procurement management. SAP Business One helps schedule and manage your inventory that are produced or purchased with definite set of criteria. SAP Business One replaces informal, ad hoc, error-prone production scheduling with a more structured process using better information from bills of material, inventory data, inputs from scheduled production and purchase orders, and demand inputs from actual and forecasted orders.
The software offers the following material requirements planning (MRP) functionality.
- Forecasts – Demand forecast is absolute necessity to build your organization. Using SAP Business One’s MRP functionality, you can predict the demand with the help of purchase history, orders received in the past and other metrics core to this function. The calculations within this function helps forecast demand for the particular product, and assists you in planning material accordingly.
- MRP wizard – With MRP wizard, you can arrange and optimise the future material requirements as well as manage and execute the purchasing and manufacturing recommendations and exceptions. You need to consider minimum order quantities and the order multiples in order to take advantage of the purchase price breaks and the standard production lot sizes, which will eventually reduce the costs. This wizard will generate a recommendation report that will offer advice to either produce or purchase the items. Numerous drill-down options let you view the net requirement calculations and the actual documents driving the gross requirements.
- Order recommendation report – This functionality helps create the production and purchase orders using the information available in the recommendation report. In case you need to outsource an item, you can readily convert the production order to purchase order with the MRP feature. You can also consolidate purchase orders to the same supplier into one order, further streamlining the purchasing process.
- Down payments – Manage your vendors’ down-payment requests for purchase orders. You can process the down payment with or without an invoice, and can decide whether you would like to create the appropriate accounting postings once the down payment is made or only document without creating any postings.
- Freight charges – Freight charges or similar additional costs can be tracked and documented with this feature. The additional costs include insurance, shipment, other fees applicable to goods etc.
- Document drafts and printing – Edit and manage all purchasing documents that have been saved as drafts and print them (including drafts) by period, document number, or document type.
- MIS Reports–You obviously get the core reports, but apart from this you can even create customised reports suited to your business needs. You can even retrieve legal and statuary reports like the excise reports from external reporting purposes.
- Smarter analytics with HANA-Sophisticated analytical “Live” reporting in procurement canbe integrated or performed side by side to help ensure real-time data in ahigh-performance and modern user interface like Dashboard, KPIs etc.
Without the right business management software, it can be difficultto stay on top of every part of your procurement processes. With the right business software, you can maximise opportunities, reduce risk, increase your bottom line, and easily achieve bigger goals. To find out how Silver Touch technologies can help call us on +44 – (0) 203-872-5140 or email us at firstname.lastname@example.org
Silver Touch Technologies is an SAP Business One partner that is certified and authorised to sell, install, and implement SAP Business One.
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