Procurement Business Process in ERP - YouTube

You want to a horse. What should you do?

Any process for you to follow?

In an organization, this process is called

Procure To Pay. It consists of five personas

Purchasing Users, Approvers, Vendors, Bank, and

Finance's Account Payable. Four stages of

event occurring in the complete process

Stage one is requisition and approval

process

Stage two is good receipt process. Stage

three is invoice matching process. Stage

four is payment run process. Input and

output related to these stages are

Purchasing Request, Workflow Approval,

Purchase Order, Good and Services, ABA file,

Bank Statement. In this video, we will

start with stage one - Requisition and

Approval Process. We can also call it

as Requisition To Order. Three personas involved

in this stage, it is the originating

user. That's the person who want to buy a

cat. Ah, sorry, a horse. The approver who

has the power to approve this requisition.

That is, who has the financial delegation

to do so. And the vendor that is the

company that will deliver goods or

services upon receiving a purchase order.

In this case, it is the horse dealer.

Originating User is a person who is

assigned to create a requisition. Depending

on the department, this originating user can sometimes play

the role as approver too. Or

sometimes, approver is the reporting

manager or whoever that can approve this

requisition. It has five steps. First step:

requisition creation. Second step:

requisition approval. Third step: release.

Fourth step: Purchase Order or PO.

Fifth step: Order awaiting receipt

Let's begin with first step, it is to

create requisition. So the user wants to

buy a horse.

Let's call him originating user. This is the

very first step in the whole process. The

originating user has to take action to

create requisition. He fills up

requisition detail in Finance System. At this

stage, he has the option to "SAVE" after he

has complete fillng all the required fields.

if he does not have a financial

delegation to approve this

requisition, he should click "Submit For

Approval" option.

This action is to pass the requisition

to the approver. The approver will

receive an email notification asking

him to approve this requisition. However,

if the originating user has financial

delegation in this organization, he can go

for either "Approve" or "Release Order".

"Approve" means to approve the requisition

and change the state to awaiting release.

"Release Order" means, the originator is

happy to approve this requisition and

release this order directly to vendor

now, like immediately. Step two is the

requisition approval. We will only enter

this step if originating user clicks

"Submit For Approval" to have approver

approve this requisition. The approver

has few options. He can "Save" the requisition. In

this case, the requisition is still in

suspend mode. It is not approved or released

to vendor yet. He can "Approve" the

requisition. This brings the requisition to

"Awaiting Release" step. He can "reject" the

requisition, for any reason. Maybe he

doesn't like horse? Try cat next time. This

action will return the recondition back

to the originating user, or anyone else

that the approver specified. And finally

he can "Release Order", that's to push the

requisition to release order to the

vendor, who is the horse dealer. Now, after the

requisition is approved, we will enter

third step, that's "Release Requisition". The

approver should click on "Release Order"

option to release the order. The fourth step is

Purchase Order Transmission. Or we call

it PO transmission. This is the step

belows from step one, two or three,

depending on the option that the

originating user or approver took

previously. The activity in this step is only

to select the PO transmission method

for the PO to be transmitted to vendor

or supplier. Few methods are

available, such as printing hardcopy,

sending via fax or email. The most

widespread practice in this modern world

is sending via email method.

The whole requisitions workflow

completed at the fifth step, which we called

it "Order Awaiting Receipt". Follow from

previous step, the PO has been

sent to the supplier. So, we are now

awaiting the good receipt. And we don't do

anything at this moment, Until

we received the good, or the service, and

of course, until you watched the follwing video.

It's a video about stage two - Good

Receipting Process. Here is the recap of

five steps in stage one, Requisition

And Approval process. First step:

Requisition Creation. Second step:

Requisition Approval. Third step: Release.

Fourth step: Purchase Order or PO

Transmission. Fifth step: Order Awaiting

Receipt. You are welcome!

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