Explanation of the procurement and expense management process from GreeneStep:

Explanation of the procurement and expense management process, including creating purchase quotations, purchase orders, converting them to receipts, managing purchase transactions, vendor management, and procurement activities, with examples from ERP systems:

Purchase Quotation Creation

The procurement process begins with creating a purchase quotation. This document requests a price quote from a vendor for specific goods or services needed by the organization. The purchase quotation includes details such as quantity, specifications, and delivery terms1.Example: In an ERP system like SAP, a user can create a purchase quotation using transaction code ME31. The quotation is then sent to potential vendors for pricing.

Purchase Order Creation

Once a vendor is selected and a price is agreed upon, a purchase order is generated. The purchase order is a legally binding document that commits the organization to buy the specified goods or services from the vendor at the quoted price.

Example: In Oracle Procurement Cloud, a user can convert a purchase quotation into a purchase order. The system automatically populates the order details and sends it to the vendor for fulfilment.

Receipt of Materials (Recording Goods Receipts)

 When the ordered goods are delivered, a goods receipt is created in the ERP system. This document confirms that the items were received and matches the purchase order. The goods receipt triggers the next steps in the procurement process, such as updating inventory and initiating payment to the vendor.

Example: In Microsoft Dynamics 365 Finance and Operations, a user can record a goods receipt by matching the delivered items to the purchase order. This updates the inventory levels and creates a payable to the vendor.

Purchase Transaction Management

Managing purchase transactions involves tracking the status of orders, monitoring spending, and ensuring compliance with procurement policies. ERP systems provide tools to automate these tasks and provide visibility into the procurement process.

Example: Procurement Cloud ERP can offers features such as automated workflows, real-time dashboards, and spend analytics to help organizations manage their purchase transactions effectively.

Vendor Management

Vendor management is the process of evaluating, selecting, and collaborating with suppliers to ensure the timely delivery of high-quality goods and services at competitive prices. ERP systems maintain a vendor database and provide tools for vendor performance tracking and communication.

Example: With an ERP system, organizations can manage their vendor relationships by onboarding new suppliers, conducting risk assessments, and monitoring supplier performance metrics.

Procurement Activities

Procurement activities encompass all tasks related to acquiring goods or services, including sourcing, negotiating contracts, and managing supplier relationships. ERP systems streamline these activities by providing centralized data, automated workflows, and reporting capabilities.

Example: Procurement ERP Cloud offers features such as strategic sourcing, contract management, and supplier collaboration to help organizations optimize their procurement activities.

By leveraging ERP systems, organizations can enhance efficiency, visibility, and control over their procurement and expense management processes. These systems provide a centralized platform for managing all aspects of procurement, from requisition to payment, and enable organizations to make data-driven decisions and optimize their spending.