Case study 2A Procurement and sourcing

Objectives

Create a purchase requisition using a procurement category and then submit and approve the purchase requisition
Create a request for quotation, reply and accept a vendor’s reply.
Create a purchase requisition permission policy with a new requester name and create an office supplies purchasing policy.
Create a purchase order for two different items, each to be delivered to a different site.
Create a charge code for vendor transport charges on various items.
Create a vendor charge group and assign it to two vendors.
Create an item charges group and use it to create an automatic charge.
Set up change management so purchase orders are approved prior to confirmation.
Create a purchase order from on a trade agreement based on value or quantity.
Create a trade agreement for domestic vendors that specifies a fixed price for a certain item.
Create a guest user for a supplier so they can access the system.

Exercise #1 Create, submit, and approve a purchase requisition

Objective: Create a purchase requisition using a procurement category and then submit and approve the purchase requisition.

An employee of the IT department of USMF wants a longer HDMI cables for the new office and meeting rooms. a purchase requisition will have to go through the internal approval process before the items are purchased.

The employee must identify a vendor for the request and the quantity required. The employee do not know the actual part number, so you will use a procurement category instead.

The IT employee asked you to help. What system features you would show and help her to use?

Create and process a purchase requisition

Go to Procurement and sourcing, then to Purchase requisitions, and then to All purchase requisitions.
Click New.
Name: Enter New HDMI Cables.
Click OK.
Reason: Select General (General supplies).
Details: Enter New, longer HDMI cables.

Add an item to the purchase requisition.

Click Add products in the Purchase requisition lines FastTab.
Select the Computers procurement category (a subcategory of Office Machines).
Click Add unlisted product to lines.
Product name: Enter 24in HDMI Cable.
Unit: Enter ea.
Click OK.
Change to the Line details tab.
Product name: enter 24-inch HDMI cable.
Quantity: Enter 5.
Unit price: Enter 41.49.
Vendor Account: Select 1001 (Acme Office Supplies).
Click OK.
Click Save.

Submit the purchase requisition created in the previous practice for approval, and perform the approval process.

Go to Procurement and sourcing, then to Purchase requisitions, and then to All purchase requisitions.
Open the draft purchase requisition created in the previous practice.
Click Workflow at the top, and then click Submit.
Comment: Enter Request for longer HDMI cables.
Click Submit.
Click Workflow>Workflow history
Click Refresh a few times and wait until the work items shows records.
Click Reassign button.
Select Admin in the User field.
Click Reassign.
Click Refresh.
Close the Workflow history page.

Approve the purchase requisition.

Click Workflow at the top, and then click Approve.
Comment: Enter Approved.
Click Approve

Exercise #2 Create, reply and accept a request for quotation (Bonus)

Objective: Create a request for quotation, reply and accept a vendor’s reply.

After the Purchase requestion was approved, the Procurement department found that there were a lot of other requests for the same type of cables, so they have decided to buy a larger quantity to benefit from bulk pricing.

The purchase clerk must create and process a request for quotation for a quantity of 500 of A0001 HDMI 6 foot cables that will be sent to two different vendors, US-111 (Contoso Office Supply) and US-103 (Rain Projectors), and it should be set to update vendor replays in order to choose the best offer.

You will have to do the following:

Create the request for quotation and send to the appropriate suppliers
Add a line to the request for quotation.
Reply to a request for quotation.
Accept a vendor’s reply.

Create the request for quotation and send to the appropriate suppliers.

Go to Procurement and sourcing, then to Requests for quotations, and then to All requests for quotations.
Click New.
Purchase type: Select Purchase order.
Document title: Enter HDMI Cables.
Site: Select 1 (Home speakers production).
Warehouse: Select 13 (Site 1 – Finished Goods).
Click OK.

Add a line to the request for quotation.

If necessary, click Add line to add a line to the list.
Line type: Select Item.
Item number: Select A0001 (HDMI 6’ Cables).
Quantity: Enter 500.
Click Save.
Send the request for quotation to the vendors.
Click Options at the top, click Change view, and then select Header view.
Open the Vendor FastTab.
If necessary, click Add to add a line to the list.
Vendor account: Select US-111 (Contoso office supply).
Click Add.
Vendor account: Select US-103 (Rain Projectors).
Click Save.
Click Quotation at the top, and then select Send under the Process section.
Make sure both vendors appear.
Click OK.

Reply to a Request for Quotation

Update the request for the quotation created in the previous practice with the vendor responses.

Make sure that the permission to edit vendor bids is setup. Go to the Procurement and sourcing module, then to Setup, and then to Procurement and sourcing parameters. On the Request for quotations tab, set the Purchaser can edit vendors bid option to Yes. Select Save

Process the quotation for US-103. Enter the vendors’ replies to the request for quotation.

Go to the Procurement and sourcing module, then to Requests for quotations, and then to All requests for quotations.
Open the request for quotations created in the previous practice.
Click Header.
Click the Vendor FastTab.
Click the Request for quotation number for US-111 (Contoso office supply).
Click Manage reply. Select the Edit at the top, from the drop-down menu select Edit RFQ reply
Quantity: Enter 500.
Unit: Enter ea.
Unit price: Enter 10.00.
Click Save.
Close the Request for Quotation Reply form.
Click the Request for quotation number for US-103 (Rain Projectors).
Navigate back to Vendor FastTab. Click the Request for quotation number for US-103 (Rain Projectors). Select the Edit at the top, from the drop-down menu select Edit RFQ reply
Quantity: Enter 500.
Unit: Enter ea.
Unit price: Enter 8.00.
Click Save.
Close the Request for Quotation Reply form.

Accept a vendor’s reply.

Go to the Procurement and sourcing module, then to Requests for quotations, and then to All requests for quotations.
Open the request for quotations created in the previous practice.
Click Header.
Click the Vendor FastTab.
Click the Request for quotation number for US-103 (Rain Projectors).
Select Manage reply. Select the Edit at the top, from the drop-down menu select Edit RFQ reply
Select Submit form the top menu.
Select Accept under the Process section.
Click OK.

Exercise #3 Create purchase requisition and purchasing policies (Bonus)

Objective: Create a purchase requisition permission policy with a new requester name and create an office supplies purchasing policy.

The purchasing manager decided to make some updates.

He wants to update the requisitions permission policy with a new requester name and create a new purchasing policy for office supplies with an additional category.

He reached out for help and you will have to do the following:

Create a purchase requisition permission policy.
Create a purchasing policy.

Create a purchase requisition permission policy.

Go to Procurement and sourcing, then to Setup, then to Policies, and then to Purchase requisition permissions.
Select Mike Danseglio in the list of workers.
Change to the Requester FastTab.
Click Add.
Name: Search for Susan Burk and then Select.
Click Save.

Create a purchasing policy

Go to the Procurement and sourcing module, then to Setup, then to Policies, and then to Purchasing policies.
Click Procurement Policy USMF.
Click the Policy rules FastTab.
Click New, then Policy.
Name: Enter Office Supplies.
Description: Enter Office supplies policies.
Policy rule type: Select Category access policy rule.
Click Create policy rule in the Policy rules section on the right.
Select Office and Desk Accessories in the Available Categories list.
Click the right arrow button.
Click OK.
Click Save.

Exercise #4 Create a purchase order for delivery to multiple sites

Objective: Create a purchase order for two different items, each to be delivered to a different site.

The purchasing clerk at USMF wants to create one purchase order for a quantity of 5 of item T0003 (surround sound receiver) from Acme Office Supplies, to be delivered today to Site 1, and a quantity of 5 of item M1101 (foam reacting agent) to be delivered to the Quality Testing Center, 123 W. Cherry Street, zip code 83642.

He is not clear how to perform this using the system and asking your help

What would you do?

Create a purchase order

Go to the Procurement and sourcing module, then to Purchase orders, and then to All purchase orders.
Click New.
Vendor account: Select 1001 (Acme Office Supplies).
Delivery date: Expand the General tab, verify the current date in the Delivery date field (this should be the default value).
Click OK.
Add items to the purchase order:
1. Item number: Select T0003 (SurroundSoundReceive).
2. Quantity: Enter 5.
3. Unit: Enter ea.
4. Click Add line.
5. Item number: Select M1101 (Foam reacting agent).
6. Quantity: Enter 5.
7. Unit: Enter PL.
Select delivery addresses for the items:
1. Select the line for item T0003 (SurroundSoundReceive) in the Purchase order lines FastTab.
2. Open the Line details FastTab.
3. Change to the Address tab.
4. Delivery address: Select Contoso Entertainment System USA.
5. Select the line for item M1101 (Foam reacting agent) in the Purchase order lines FastTab.
6. Change to the Line details FastTab.
7. Click the Add address button (+) to the right of the Delivery address field.
8. Name or description: Enter Quality Testing Center.
9. Zip/postal code: Enter 83642.
10. Street: Enter 123 W. Cherry Street.
11. Click OK.
Click Save.
On the Action pane, click Purchase
Click Actions > Confirm.
On the Action Pane, click Receive.
Click Generate > Product receipt.
Change Quantity to Registered quantity.
In the Product receipt field, enter the product receipt number. For example, enter PR123.
Click OK to post the product receipt.
Close all pages.

Exercise #5 Create a charges code

Objective: Create a charge code for vendor transport charges on various items.

The accounts payable coordinator at Contoso Entertainment Systems USA must complete some setups for transport charges added to various items by the vendor.

She can do this in the system by creating a charges code with the following specifications:

Name of the charges code: TRANSTO
Description: Transportation Fee to our sites
Account: 411400
This fee does not require an item sales tax group.

She asked for your help to show her how this charges can be configured. What would you do?

Create a charges code

Go to the Accounts payable module, then to Charges setup, and then to Charges code.
Click New.
Charges code: Enter TRANSTO.
Description: Enter Transportation Fee to our sites.
Change to the Debit section.
Type: Select Ledger account.
Posting: Select Payment fee.
Account: Select 411400.
Change to the Credit section.
Type: Select Customer/Vendor.
Click Save.

Exercise #6 Create a vendor charges group and assign to vendors (Bouns)

Objective: Create a vendor charge group and assign it to two vendors.

The accounts payable administrator at Contoso Entertainment Systems USA, wants to make updates for Fabrikam supplier, that has two vendor accounts from which Contoso purchases items.

Fabrikam recently imposed an additional 15 percent freight charges for all purchase orders.

He is not sure how to set up a new charges and not quite sure how to assign to the supplier accounts.

You will have to do the following:

Create a vendor charges group.
Update vendors to use the new vendor charges group

Create a Vendor Charges Group

Go to the Accounts payable module, then to Charges setup, and then to Vendor charges group.
Click New.
Charges group: Enter 06.
Description: Enter Freight 15%.
Click Save.

Update vendors to use the new vendor charges group.

Go to the Accounts payable module, then to Vendors, and then to All vendors.
Open the vendor record for vendor US-101 (Fabrikam Electronics).
Click Edit.
Open the Purchase order defaults FastTab.
Charges group: Select 06 (Freight 15%).
Click Save.
Close the vendor record.
Open the vendor record for vendor US-104 (Fabrikam Supplier).
Click Edit.
Open the Purchase order defaults FastTab.
Charges group: Select 06 (Freight 15%).
Click Save.
Close the vendor record

Exercise #7 Create an automatic charge (Bonus)

Objective: Create an item charges group and use it to create an automatic charge.

The accounts payable coordinator at Contoso Entertainment Systems USA, wants to make updates to vendor charges.

Datum Receivers (US-105) applies a 15 percent freight charge for all orders due to the large quantity and weight of items we buy.

Since this charge only applies to US-105 and it will apply to every order, you need to help the coordinator to set up an automatic charge for vendor group (06) and the item charges group (123).

You will have to do the following:

Create an item charges group.
Create an automatic charge.

Create an item charges group

Go to the Accounts payable module, then to Charges setup, and then to Item charge groups.
Click New.
Charges group: Enter 123.
Description: Enter 15% Freight Charge.
Click Save.

Create an automatic charge

Go to the Accounts payable module, then to Charges setup, and then to Automatic charges.
Level: Select Line.
Click New.
Account code: Select Group.
Vendor relation: Select 06 (Freight 15%).
Item code: Select Group.
Item Relation: Select 123 (15% Freight Charge).
Click Save.
Click Add in the Lines FastTab.
Charges code: Select TRANSTO (Transportation Fee).
Category: Select Percent.
Charges value: Enter 15.00.
Click Save.

Exercise #8 Approve purchase orders prior to confirmation (Bonus)

Objective: Set up change management so purchase orders are approved prior to confirmation.

Contoso has decided that all office supply purchase orders from supplier 1001 should be approved prior to confirmation. They asked you to activate the change management feature for Supplier 1001.

You will have to do the following:

Set up change management against Supplier 1001 only.
Configure change management for a vendor.

Set up change management against Supplier 1001 only

Go to Procurement and sourcing, then to Setup, and then to Procurement and sourcing parameters.
Select the General tab on the left.
Change to the Change Management for Purchase Orders section.
Allow override of settings per vendor: Select Yes.
Click Save.

Configure change management for a vendor

Go to Procurement and sourcing, then to Vendors, and then to All vendors.
Open the vendor record for vendor 1001 (Acme Office Supplies).
Open the Purchase order defaults FastTab.
Click Edit.
Go to the Change Management for Purchase Orders section.
Override settings: Select Yes.
Activate change management: Select Yes.
Click Save.

Exercise #9 Create trade agreements for vendors

Objective: Create a trade agreement for domestic vendors that specifies a fixed price for a certain item.

The company managed to standardize the purchase price for item A0001 with all domestic vendors to be $8.26. You needto help the purchase manager to record this purchase price using a trade agreement journal, so that whenever a purchase order is created for item A0001 and the vendor is from the domestic vendors, the price will default to $8.26.

Create a Trade agreement for a vendor.

Go to Procurement and sourcing, then to Prices and discounts, and then to Trade agreement journals.
Click New.
Name: Select S_Price for Sales price adjustment
Click the Lines button to open the journal.
Relation: Select Price (purch.).
Account code or Party code type: Select Group.
Account selection: Select Domestic vendors.
Item code/Product code type: Select Table.
Item Relation: Select A0001, HDMI 6’ Cables.
Site: Enter 1.
Warehouse: Enter 13.
From: Enter 1.
Amount in currency: Enter 8.26.
Change to the Details tab.
From date: Select February 15, 2017.
Select Validate > Validate all lines.
Click OK.
After successful validation, post the journal.
Close all pages.

Exercise #10 Create a purchase order based on a trade agreement

Objective: Create a purchase order from on a trade agreement based on value or quantity.

The purchasing manager always try to negotiate with vendors and create an agreed-upon purchasing price list, discounts, and agreements for products that are frequently purchased from a specific vendor.

Often contracts with vendors can be created to get the best prices for a specific commitment either based on value or quantity.

In this case the purchase manager made an agreement on a price for 100 of item number D0002 and would like to use the system to record this agreement.

You were asked to help the purchase manager and show how this can be recorded. What would you do?

Create a purchase agreement

Go to the Procurement and sourcing module, then to Purchase agreements, and then to Purchase agreements.
Click New.
Vendor account: Select US-104 (Fabrikam Supplier).
Purchase agreement classification: Select General purchases.
Open the General FastTab.
Document title: Enter General Purchase.
Default commitment: Select Product quantity commitment.
Click OK.

Add an item to the purchase agreement

Click Add line in the Purchase agreement lines FastTab to create a line.
Item number: Select D0002 (Cabinet).
Site: Select 1 (Home speakers production).
Warehouse: Select 13 (Finished Goods).
Quantity: Enter 100.
Unit price: Enter 145.50.
Expiration date: Select the end of the next month.
Click Save.

Confirm the purchase agreement

Click Purchase Agreement at the top, and then select Confirmation under the Generate section.
Select Yes in the Print report field.
Click OK.
Close all pages