Setting Up Purchasing
There are several setup steps for outside processing that you must perform in Purchasing. Some of these steps are optional and can be performed to help facilitate your outside processing flow. Other steps are required to be able to link requisitions and purchase orders to jobs or repetitive schedules as well as to receive purchase order shipments.
Define Outside Processing Line Types
Purchasing requires you to enter a line type when you enter a requisition or purchase order line. Purchasing is installed with a predefined line type called Outside Processing, and Work in Process uses this line type when it creates pending requisitions. You can define additional line types for outside processing. You may want to use a user defined line type if you manually requisition and purchase an outside processing item. See: Defining Line Types.
Enter Employee and Link to Applications Users
Purchasing requires an employee for all requisitions. When Work in Process requisitions outside processing items, it includes an employee name for Purchasing to put on the requisition as the preparer. This employee name is the one linked to the applications user who performs the move transaction that initiates the requisition.
To support this functionality, you must define employees and link them to the applications users who enter move transactions. This includes users who enter move transactions on-line as well as users associated with bar code transactions and other moves you insert into the move transaction open interface. See: Enter Person and Users Window.
Define Sourcing Rules
You can define rules for each outside processing item to help you determine from which supplier to source the item. When Work in Process requisitions an outside processing item, it checks whether a sourcing rule exists for that item. If so, then that supplier is defaulted on the requisition. You can override the supplier default on the purchase order. See: Automatic Sourcing.
Define Outside Processing Item List Prices
When you requisition an outside processing item, Purchasing enters a default price for the item. If there is a blanket purchase agreement, Purchasing uses this price. Otherwise, Purchasing defaults the list price from the Items window for the outside processing item. See: Defining Items.
If you have defined source documents in the Approved Supplier List, Purchasing uses the highest ranking document to determine the price.
Define Outside Processing Item Lead Times
When Work in Process requisitions an outside processing item, it calculates the Need by Date by adding the sum of the preprocessing, postprocessing, fixed lead time, and the variable lead time elements of the outside processing item to the move transaction date. You should maintain accurate item lead times for outside processing items in the Items window. See: Defining Items.
Define Overreceipt Tolerance and Control
You can specify a quantity received tolerance percent to limit the quantity you can over receive on a purchase order shipment. You can also control whether you provide a warning for over-receipts or whether you prevent over-receipts beyond the percentage you specify. For outside processing, you may want to prevent any over-receipts by specifying a 0% tolerance. For example, if you purchase assembly plating for 10 assemblies and receive 11 from the supplier, you are unable to automatically move the assemblies to the next operation. Work in Process prevents move transactions for quantities greater than what exists in an operation. Also, you are adding more costs to a job or repetitive schedule than you relieve which causes a variance at job or period close.
You can define your receiving tolerance in the Receiving Options window in Purchasing and override it at the supplier, item, and purchase order shipment levels. See: Defining Receiving Options.
Control Your Receipt Routing
You can control your receiving routing by specifying one of three options. The first option lets you receive an outside processing item directly into work in process. The second option requires you to receive to the Ship To location before you can deliver to work in process. The third option requires you to deliver to the Ship To location, inspect the outside processing items, and then deliver to work in process.
You can define your receiving routing in the Receiving Options window in Purchasing and override it at the supplier, item, and purchase order shipment levels. You can also override the receiving routing at receipt time if the RCV: Allow Routing Override profile option is set to Yes. See: Defining Receiving Options and Profile Options in Purchasing.
Define Ship To and Deliver To Locations
You must define Ship To and Deliver To locations to include on your requisitions and purchase orders. When you receive an outside processing item from a supplier, you receive to the Ship To location specified on the purchase order shipment. When you deliver the outside processed items to work in process, you deliver to the purchase order destination associated with your purchase order distribution. The destination location is the same as the location associated with the department of the outside operation. See: Site Locations.
Define Accounting Information
You must define a Receiving Account in the Receiving Options window. (See: Defining Receiving Options.) Purchasing debits this account when you receive outside processing items and credits this account when you deliver outside processing items to work in process. Bills of Material defaults this account into the Absorption Account when you define an outside resource.
In the Organization Parameters window you must define the Purchase Price and Invoice Price Variance accounts and the Inventory AP Accrual account. Bills of Material defaults the Purchase Price Variance account into the Resource Variance Account when you define an outside resource. Purchasing charges this account when you receive an outside processing item at a purchase price which differs from the standard cost of the resource associated with the item and when you charge the resource at standard. Purchasing credits the Inventory AP Accrual Account when you receive outside processing items (and Payables reverses the accrual when you enter the supplier invoice). The Invoice Price Variance account is charged when you enter an invoice for an amount different from the purchase order price. See: Organization Parameters Window.
