Assignment on Enterprise resource planning

Submitted by: Parag Rastogi

PGPABM-II
34
Introduction

Purchase also plays a very important role in a manufacturing organisation. Purchase procures
all sorts of items or products required by the organisation, provides all departments with their
necessary item requirements, keeps a ready count of the quantity of the different items and
deals with the suppliers in an endeavour to procure new stock. Purchase always pumps store
with oxygen and keep it alive. So that store can keep the other departments alive. Purchase
Module is fully integrated with related functional processes including automated inventory
replenishment, sales requests for non-stock and direct-ship items.

The Purchase module controls the inventory purchasing side of your business. You can track
Purchase Orders, supplier prices, and quantities on order. When used in concert with the
Inventory and the Invoicing/Order Entry modules, the Purchasing module can calculate
quantities to order to meet customer commitments. Built-in lead times will ensure that your
purchasing meets your customer or production due dates. With the usage of Purchase module
you will increase your inventory efficiency and eliminate costly shortages.

Overview of the Purchase Order

Following is the typical example for a heavy engineering company which is in the
manufacturing of heavy machineries. The function of purchase begins with Material Indent.
The Indent generation can be several folds. One is as per demand by a department. Their
requisition will be routed through store. The purchase can see that the Indent is attached with
a definite requisition. The second is auto-generation of Indent. A Re-Order Level can be
given to all materials in the store. When the stock goes below the Re-Order Level an Indent
will be generated. A separate information sheet will be attached with every indent. That sheet
will show if the material is at all lying with any department, un-consumed. If the department
finds that the purchase order is to be made, it will first ask for Supplier quotation. If the
supplier mail number is provided the request for quotation can be passed to the supplier. In
that case any kind of manipulation or data tampering can be handled. On receipt of
quotations a comparative statement should be generated by the system and the statement
should be forwarded to the higher authority for finalisation. On approval the purchase order
will be made. We have found that in some cases direct cash purchases are made. It is better
to stop that practice. But if it is required to continue it is better that at the Gate the material in
should be recorder as Cash Purchase. Later a list of similar kind of purchase can be generated

Flow chart- showing purchase process

 Material Purchase
Indent department

Auto
Material lying with the stocks? Requisition
generation of
from store
Indent

Re-order level If no
is lower than Don’t make
stocks order

If yes

Make order

Ask for supplier’s

quotations

Supplier 1 Supplier Supplier

2 3

Receive
quotation
s

Put for approval in

front of higher
authority

Passed Make
by purchase
authority