Introduction
It is important to control stock levels and place purchase orders in time to fulfill your committed delivery times. Several different methods could be used to calculate the ideal purchase order quantity. ParagonERP will create purchase order proposals based on your available to sell quantity in combination with minimum and maximum stock levels and vendor order quantities. You can also perform PO proposal calculations outside of ParagonERP and import the results, before generating the required purchase orders.
Calculation
Most ParagonERP users have many products in stock and a wide variety of vendors from whom to procure those products. Subsets of products might be managed by product groups or vendors.
Product(s) selection
To grant you better control of the purchasing function in ParagonERP, PO proposals can be created by product number, product group, vendor, or purchaser. These parameters need to be set on the product module before using the proposals module. In the image below the parameters to select a subset of products are shown in yellow:
- Vendor or Purchaser
- Product group
- Product number
Configuration
To make use of the PO proposal module several screens need to be configured and data needs to be set.
Product Module:
- Min quantity
- Max quantity
- Vendor list
- Purchase
Person module
Create persons as purchaser
Vendor product association
Set up vendor product relations with minimum order quantity, packaging unit size, and lead time.
PO proposal calculation
Purchase orders can be proposed based on the available to sell quantity of a product. It is compared to the minimum and maximum stock quantity on the product and a proposal is calculated taking into account the purchase order packaging size and the vendor's minimum order quantity.
The minimum and maximum stock quantity values are set on the product (see the purple section in the image above). The settings for packaging unit and minimum order quantity are set on the vendor product associations screen (see purple section in the image below).
Products should be purchased when ATS is below the minimum stock level. (Note: ATS should be set to include inbound transactions in MyCompany).
When the ATS of a product is below the minimum stock level, ParagonERP will try to fill stock to the maximum stock level (calculated quantity). However, it will propose a recommended quantity which is a multiple of the packaging unit, taking into account the minimum order quantity. The user can accept this proposal, or change the proposed order quantity.
Formula:
- Calculated order quantity =
Max Stock level-ATS - Recommended order quantity =
ATS+Recommended Quantity<Max Stock level
Purchase order generation
Select the products for which purchase order proposals are needed (1). Enter the required selection criteria like product group, vendor or purchaser and click the calculate button. ParagonERP will make purchase proposals for the selection on the screen. If no purchase orders are required, no lines are shown.
(2) Select the products for which an order needs to be created. The user can adjust the quantity (3) and the vendor (4) for which an order needs to be created. Click the generate PO button (5) to actually create the purchase order. Note that the purchase order will be created in issued status and will have a requested delivery date respecting the lead time found in the product module.
What's next?
For more information about purchase orders: