Professional Documents
Culture Documents
On
Purchasing
(Functional Document)
1
Scope
This case study is considered for purchasing of inventory items based on reorder levels.
Other types of purchasing are not included in this case study. Inventory will have so
many transactions but considered transactions like
Receiving the material from supplier, issues against stock and updating of stock.
The factors for computing Economic Order Quantity are FIXED at the ITEM
level.
Min lead time and Max lead time are FIXED at ITEM level.
Converting PR to PO is done manually by taking supplier as input.
Sending PO document to supplier’s thru e-mail.
Rejection process is confined to updating of GRN. (Goods Receipt Note).
All items having single Unit of Measure.
Currency details identified against supplier and get defaulted in supplier specific
transactions.
Single inventory location.
The items which go into the product are considered.
Out of Scope
2
• Finally, the holding stores update the inventory items with received quantity and
cost with moving weighted average method. Whenever request for issue comes,
holding stores issues the material.
Apart from these, client also performs inventory analysis like ABC to have better control
on inventory.
Diagram Representation
Issue
Check Reorder Level Ok
Qty<Reorder Level
Raise Requisition
PR Info Supplier Info
Convert to PO
PO Info Send to Supplier
Place Order
Supplier
PO Info &
Inspect details Receive Material
ABC Company is having stiff competition from externals with respect to delivery,
Cost of the Product. It is not able to cop up in market due to their high inventory carrying
cost, Shortage of materials due to more purchase lead times and lack of proper planning.
Committee reviewed the existing business process and identified the following
requirements which need to be addressed.
3
• Perform the ABC Analysis to identify the items to have a better control on the
inventory items.
• Identify the Maximum Stock Level, Minimum Stock Level,Reorder level and
Reorder Quantity to all identified materials based on
o Purchase lead times
o Cost of the product
o Availability of the product.
• Identify the suppliers for items
• Raising the purchase requisitions based on Reorder levels
• Reducing the purchase lead time involved
o Automatically generating Purchase requisitions.
o Converting Purchase requisitions to Purchase Orders
o Implementing Electronic media in passing documents to suppliers.
Company reviewed the Suggested changes in business process and apart from
bringing these changes, it identified a requirement of software solution which take care
all criticality requirements in producing competitive product.
4
• Purchase Requisitions should be raised automatically based on reorder levels
• Capturing Supplier Information to extent of doing internet enabled document
Transactions
• Converting Purchase requisitions manually or through system to Purchase Orders
• Capture Receiving goods Information
• Provision to Enter Inspection Details and accepting Details for Received Goods
• Support to store credit the accepted Items and Updating Stock Balances, cost
based on weighted average cost
• Providing on-line Binbalance Inquiry information and provision to know cost,qty
on hand on any given date