Before we start to go into the details, the lines below give an overview of the business processes in purchasing.
3.1.1 Basic Approach
Starting point for procurement are correct master data, in particular the data on vendors and products. When purchasing services or non-inventoried commodities, you can use procurement categories instead of products.
3.1.1.1 Master Data and Transactions in Purchasing
Vendor and product records are master data, only occasionally updated after initially creating the individual records. In the course of the purchasing process, planned and actual purchase orders (transaction data) receive default values from vendor and product records (master data), which you can override in the transaction – for example if agreeing on special payment terms in a purchase order.
Modifying data in a transaction does not update the related master data. If you agree with a particular vendor to change for example the payment terms in general, you have to update the payment terms in the vendor record.
Based on correct master data, the purchasing process – including required predecessor and successor activities – consists of six steps as shown in Figure 3-1.
Figure 3-1: Purchase order processing in Dynamics AX
© Springer Fachmedien Wiesbaden 2016 A. Luszczak, Using Microsoft Dynamics AX, DOI 10.1007/978-3-658-13622-2_3
3.1.1.2 Material Requirements, Purchase Requisition, and Request for Quotation
The identification of material requirements usually is the first step in the purchasing process. Depending on the particular product and the company-specific circumstances, there are two ways for processing material requirements:
Automatically – Generating planned orders
Manually – Entering purchase requisitions
The required basis for generating accurate planned orders within operations planning (master planning, see section 6.3) are accurate figures on inventory quantity, sales orders, purchase orders and forecasts on the one hand, and appropriate item coverage settings on the other.
Purchase requisitions – unlike planned orders, which are created automatically by master planning – are manually entered, internal documents asking the purchase department to acquire specific items (like consumables and office supplies). A purchase requisition runs through an approval process workflow before it is released as a purchase order.
Requests for quotation are sent to vendors in order to receive information on prices and delivery times. The purchasing department can enter requests for quotation either manually, or generate them from planned purchase orders or purchase requisitions.
3.1.1.3 Purchase Order
You can create purchase orders either manually or by transferring planned orders, purchase requisitions, or requests for quotation. A purchase order consists of a header, containing fields which are common to the whole order (e.g. vendor data), and one or more lines, containing the required items.
Once you have completed entering the order, you have to start the approval process (in case change management is active). After approval – or without approval if change management does not apply – you can optionally post a purchase inquiry and send it to the vendor for validation purposes.
Before you can continue with order processing, you have to post a purchase order confirmation. Posting the confirmation means to save it, optionally sending it to the vendor electronically or as printed document. The purchase order confirmation is available with its original content afterwards, no matter if there is a later modification on the actual purchase order.
The status of a purchase order is indicated by the order status and the document status in the header, and by the posted quantities in the lines. Inquiries, workspace information, and periodic reports provide the option to recognize issues like late shipments.
3.1.1.4 Product Receipt, Invoice Receipt, and Vendor Payment
Once the goods or services actually arrive, you should record the product receipt in Dynamics AX. Posting the product receipt increases the physical quantity in inventory and reduces the open quantity in the purchase order.
Together with the item delivery, or at a later time, the vendor submits an invoice.
When registering the invoice in the vendor invoice form, invoice control features support matching the invoice with the purchase order and the product receipt. If an invoice is not related to a purchase order, you can enter it in the vendor invoice form or in an invoice journal (see section 9.3.3).
Based on posted invoices, you can record payments to vendors either manually or through a payment proposal. Payment proposals include due date and cash discount period calculation. Payment processing is independent from purchase orders and usually a responsibility of the finance department. You can find a description on vendor payments in section 9.3.4 later in this book.
3.1.1.5 Ledger Integration and Voucher Principle
Because of the deep finance integration in Dynamics AX, all inventory and vendor transactions in purchasing are posted to ledger accounts specified in the setup as described in section 9.4.
In order to keep track of the whole business process, Dynamics AX comprehensively applies the voucher principle to transactions: You have to register a transaction in a document (voucher), before you can post it. After posting, it is not possible to modify the document any more. Figure 3-2 shows an overview of the documents in purchase order processing.
Figure 3-2: Transactions and posted documents in purchasing
3.1.2 At a Glance: Purchase Order Processing
In order to provide an overview of the main steps in purchase order processing, this section shows the basics. In the example, we create an order starting in the Purchase order preparation workspace and post all transactions directly in the purchase order form. Of course you can also create the order from the vendor form, or directly in the purchase order list page.
In the Purchase order preparation workspace, which you can access from the dashboard or from the Workspaces folder of the Procurement and sourcing menu, click the button New purchase order in the action pane. The Create purchase order dialog shows next, where you have to select a vendor in the Vendor account field (you can trigger the search there by starting to type the first characters of the vendor name). Clicking the button OK in the dialog creates a purchase order header with default data like language or currency from the selected vendor.
The purchase order detail form then opens in lines view. If you are in view mode, switch to the edit mode by clicking the button Edit or by pressing the F2 key. On the tab Purchase order lines, you can start to enter an order line with item number, quantity, and price. When selecting the item, Dynamics AX initializes the quantity, the price, and other fields like the site with appropriate default values. If you want to enter a second line, press the Down Arrow on the keyboard or click the button Add line in the toolbar. Clicking the button Header (or Lines) below the action pane switches between the lines view (see Figure 3-3) and the header view.
Figure 3-3: Entering a purchase order line (Lines view, in edit mode)
If change management applies, the Approval status (shown on the right-hand side below the action pane) is “Draft” and you have got to click the button Workflow/Submit in the action pane after entering all order lines. After approval – or without change management immediately – the Approval status is “Approved”.
Next, post the purchase order confirmation by clicking the button PURCHASE/
Generate/Confirmation (or PURCHASE/Actions/Confirm) in the action pane. If you want to print the purchase order, set the sliders Posting and Print purchase order in the posting dialog to “Yes”. The button Printer setup in the dialog provides the option to select a printer for the printout (compare section 2.2.1).
Figure 3-4: Confirming and printing the purchase order
When receiving the item, post the product receipt by clicking the button RECEIVE/
Generate/Product receipt in the action pane of the purchase order form. Posting the product receipt work similar to the purchase order confirmation described above.
But unlike purchase order confirmation, the product receipt usually is not printed.
If there is no prior item arrival registration, select the option “Ordered quantity” in the lookup field Quantity and enter the vendor’s packing slip number in the column Product receipt on the tab Overview of the posting dialog before clicking OK.
The product receipt increases the physical quantity in inventory and changes the order status to “Received”.
If you want to post the invoice receipt directly from the purchase order form, click the button INVOICE/Generate/Invoice in the action pane of the order form.
Containing an action pane and FactBoxes, the form for vendor invoice posting is different from the other posting dialogs. In order to check the totals there, view the appropriate FactBox on the right of the form or click the button Totals in the action pane. After entering the vendor invoice number in the field Number (Invoice identification), post the invoice by clicking the button Post. Invoice posting generates an open vendor transaction to be paid and changes the order status to
“Invoiced”.
Note: If you want to quit the invoice form without saving, delete the invoice there and do not simply close the form (which would save a pending invoice).