1. Materials and Suppliers – Strategic Procurement Richard Byrom Oracle Applications Consultant Enterprise Resource Planning Seminar – 24 th May 2002 Richard Byrom Oracle Applications Consultant Enterprise Resource Planning Seminar – 24 th May 2002

2. Objective To illustrate how ERP systems add value to the procurement process To illustrate how ERP systems add value to the procurement process

3. Procurement Process Requisitions Purchase Orders Receiving Payment Supplier Performance Catalog Content Management Supplier Management OrderingSourcing Analysis Negotiations & Awards

4. Procurement Process Requisitions Purchase Orders Receiving Payment Ordering

5. Without ERP Systems in Procurement Disparate and fragmented systems do not talk to each other Information is not appropriately shared between applications Too much paper! Risk of error is high Transactions costs are inevitably increased Disparate and fragmented systems do not talk to each other Information is not appropriately shared between applications Too much paper! Risk of error is high Transactions costs are inevitably increased

6. Procurement Process Failure Requisitions Purchase Orders Receiving Payment Ordering

7. Benefits of ERP systems in Procurement Create, edit and view purchasing documentation on-line in one application (no re-entry of document information i.e information flow is ensured across applications) Review the current status and action history of all purchasing documentation Route purchasing documentation according to approval hierarchies Enables accurate and automated accounting for all transactions On line approvals – less paper Reduced total transaction costs Create, edit and view purchasing documentation on-line in one application (no re-entry of document information i.e information flow is ensured across applications) Review the current status and action history of all purchasing documentation Route purchasing documentation according to approval hierarchies Enables accurate and automated accounting for all transactions On line approvals – less paper Reduced total transaction costs

8. Purchase Requisitions

9. Why Purchase Requisitions? Purchase requisitions allow you to decentralise your purchasing department by having requesters Purchase requisitions allow you to source your requisition with the best suppliers and at the lowest cost Purchase requisitions ensure that the appropriate management approval is given before purchase orders are created. Purchase requisitions allow you to decentralise your purchasing department by having requesters Purchase requisitions allow you to source your requisition with the best suppliers and at the lowest cost Purchase requisitions ensure that the appropriate management approval is given before purchase orders are created.

10. Where Purchase Requisitions Fit Inventory WIPMRP Demand Requisition Requisitionpool Order entry Import/reschedulerequisitions Approve Supplier Internal sales order Manuallycreate Approval Order Mgmt

11. Business Needs Associated with Purchase Requisitions Automate the procurement process Monitor and control spending amounts by approval authorizations Simplify the interaction with suppliers Free buyers from daily transactions to focus on negotiation management and supplier analysis Reduce administrative costs and inefficiencies Automate the procurement process Monitor and control spending amounts by approval authorizations Simplify the interaction with suppliers Free buyers from daily transactions to focus on negotiation management and supplier analysis Reduce administrative costs and inefficiencies

12. Who Acts on Purchase Requisitions? Employee Buyer or buyer-planner Approvers Suppliers Purchasing staff Employee Buyer or buyer-planner Approvers Suppliers Purchasing staff

13. Purchase Orders

14. Why Create Purchase Orders? Supplier is selected to satisfy demand for goods or services Summarize all demand for a given item or category Supplier terms and conditions established Contract with a supplier: external or internal Business need for goods or services is formalized Supplier is selected to satisfy demand for goods or services Summarize all demand for a given item or category Supplier terms and conditions established Contract with a supplier: external or internal Business need for goods or services is formalized

15. Where Purchase Orders Come From Oracle WIP Other systems Demand Manuallycreated Automaticallyimported Create purchase orders Oracle Inventory Oracle MRP Requester Requisitions Oracle WIP Other systems Oracle Inventory Oracle MRP Oracle Order Mgmt

16. Procurement Solution enables you to: Create purchase orders easilyCreate purchase orders easily Create purchase orders from:Create purchase orders from: –Requisitions –Quotations –Other purchase orders Create one time and repeated purchase ordersCreate one time and repeated purchase orders Flexible approval and security controlsFlexible approval and security controls Manually Create Purchase Orders Using Procurement Solution

17. Purchase Invoices

18. Entering Purchase Order Matched Invoices : Overview Receive invoice Enter invoice Approve invoice Match invoices to PO or receipt File invoice Account for invoice View invoice Pay invoice

19. Why Enter Purchase Order Matched Invoices? Match Payables invoices to purchase orders to ensure that you pay only for the goods that you have ordered. Match to purchase order receipts to ensure that you pay only for goods that you have received. Payables automatically creates invoice distributions based on the purchase order distributions. Match Payables invoices to purchase orders to ensure that you pay only for the goods that you have ordered. Match to purchase order receipts to ensure that you pay only for goods that you have received. Payables automatically creates invoice distributions based on the purchase order distributions.

20. You Can Set Up Controls That Require You To Do The Following: Purchase order match each invoice Match the invoice to either a purchase order or receipt Match within amount or quantity tolerances Purchase order match each invoice Match the invoice to either a purchase order or receipt Match within amount or quantity tolerances

21. Accounting Entries should be created at each stage of the process Record items into inventory or expenses Appropriate valuation of stock should take place Physical and Monetary Variances between requisition and order should be recognised Physical and Monetary Variances between order and invoice should be recognised Account for invoice and payment into creditors Record items into inventory or expenses Appropriate valuation of stock should take place Physical and Monetary Variances between requisition and order should be recognised Physical and Monetary Variances between order and invoice should be recognised Account for invoice and payment into creditors

22. Conclusion ERP is the best solution for your organisations procurement problems ERP is the best solution for your organisations procurement problems