10 Ways Improve Procure Pay Process Using Sap Business One

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Description

SAP Business One

Planned Procurement of Raw Materials

SAP Business One provides a functionality called Material Requirement Planning (MRP) which automates the process of finding out the potential material shortages with respect to a proposed fulfillment of a sales plan.

System aggregates all demand elements and does backward calculation of materials and sub-assemblies required and makes recommendation on what item needs to be procured, in how much quantity and what should be the PO release date.

This process can take care of all the items are a part of the bill of material of any FG or WIP.

Procurement of consumables based on inventory levels

Certain items, normally found in C class, need to be planned based on consumption.

SAP Business One provides a functionality by which users can store the minimum and maximum inventory quantity (location wise). Further, the system recommends procurement proposals based on the trigger of inventory falling below the minimum level.

Reduction in maverick spends

Maverick spend means placing orders at prices higher than the prices negotiated in contract, usually done without consulting the procurement department.

SAP Business One will put a complete end to such procurement and will instill a much disciplined process for procuring material and services. Only authorized users from purchase department can raise Purchase Orders in the system.

Ad hoc procurement will be minimized or eliminated

These instances will be either eliminated or reduced drastically with SAP Business One. No material will be allowed to enter the premises without a PO in the system. Buyers who are at fault, will have explain the reason for such procurement to higher ups before being able to get their ad-hoc PO (at higher rate) approved.

PO approvals

It is important to have an established authority matrix in any purchasing organization.

SAP Business One allows you to set up value based rules that help the system determine automatically, as to whose approval is required for a particular PO in the system. Needless to say, procurement against a PO is only possible if it authorized/approved by the concerned authority.

Since this process cannot be circumvented, management can be assured of the fact that no untoward practices can prevail in the company.

System Control on buying prices

When manual systems are used it is possible that rates in the purchase order may, either inadvertently or on purpose, be higher than what has been agreed on contract or price list.

With SAP Business One, there are two ways by which such situations can be eliminated.

Option one is to use a price list functionality. Using this, the system will automatically populate the price as maintained in the price list and user will be allowed only to reduce the price, if at all changes are allowed.

Second option is to use the functionality called Blanket PO where a contract is created in the system for a combination of item and vendor and all further POs for the same combination will necessarily pick the prices from this contract and user will be allowed only to reduce the price, if at all changes are allowed.

Accurate accounting of material sent back to vendor/h5>

Using the purchase return functionality, users can ensure that the inventory quantity, its value and vendors credit amount are adjusted appropriately whenever material is sent back to vendor.

Tracking of performance of vendors

A report can be easily developed that will track the performance of the vendor in terms of delivery (actual v/s planned delivery date) and percentage rejection and a score can be arrived at. This score/rating can be updated in the vendor master and can be used for strategic decisions.

Eliminate the possibility of business transactions carried out by your team with mala fide intention

A company that works with manual processes is exposed to the risk of fraudulent transactions carried out by staff.

With SAP Business One, you can implement segregation of duties (SOD) quite comprehensively to ensure that no single system user can carry out transactions that can be potentially harming to the company financially. For example, a staff member should not be allowed to raise the PO and also make payments. With well-structured authorization profiles such possibilities can be eliminated.

In addition to this you can implement other business rules that may prevent undesired transactions. For example, disallowing good receipt quantity to be in excess of the tolerance limit defined.

Such capabilities makes your company free of such exposures and management can freely focus on business growth and other strategic initiatives without being concerned about mal practices.

Improved communication with vendors

You can email the PO to your vendor from within the SAP system, thus making it more productive process. You can also send SMS alerts to your vendors for pre-defined triggers say, release of payment, rejection of material, debit note etc.

This will bring more transparency in the process and help build a trust based long term partnership with your vendors.