Purchasing Methodology

In M.O.M. there are two basic types of purchasing processes: the purchasing process for regular items that are ordered for in-house stocking, and the purchasing process for drop shipped items that are purchased by you but shipped directly to your customer.

See Also

Accounting Methodology

Line Item Grid Column Definitions

Regular Items - In-House Stock

The purchasing process for these items involves five steps:

Step 1 - Establish Low Level Settings: A Low Level is the level at which you tell M.O.M. that you want to reorder the item. M.O.M. provides two methods for establishing this setting for your stock items.

• Method 1 - Manual: Use the Maintain Stock Items function (found in the Product menu) to manually establish the low level threshold quantity in the RE-ORDER WHEN STOCK IS   BELOW field.

• Method 2 - Automatic: Use the Establish New Low Levels function (found in Product, Purchasing) to automatically redefine low levels based on previous sales.

Step 2 - Identify Items that Need to be Purchased and make Purchasing Decisions: Select the Product menu from the main menu. Select the Purchasing menu from the Product Menu. On the Purchasing menu, select the Order Product option to display the Order Product screen. This function enables you to order items based on low level, product stock code, or your own special criteria.

Step 3 - Create and Print Purchase Orders: Select the Product menu from the main menu. Select the Purchasing menu from the Product Menu. On the Purchasing menu, select Create Purchase Orders to generate the purchase orders for all purchasing completed in Step 2. On the Purchasing menu, select View/Edit Purchase Orders to display the Purchase Order List to view/change purchase orders after they are created. Select Print Purchase Orders to print the purchase orders after they are created.

Step 4 - Inform M.O.M. about Delivery of Product: Select the Product menu from the main menu. Select the Receiving & Inventory menu from the Product Menu. On the Receiving & Inventory menu, select Receive Product to display the Purchase Order List to receive all or part of the items on a purchase order. Finally, select Process Updates to Inventory on the Receiving & Inventory menu to adjust the inventory levels in the system for the completed delivery.

Step 5 - Pay Suppliers: Select the Accounting menu from the main menu. Select the Accounts Payable menu. Select the Pay Suppliers option to create the payable transaction for each supplier invoice. See Accounting Methodology for more information about processing payables.

Drop Shipped Items

A drop shipment is a type of purchase order where the supplier ships an item directly to your customer. Items are defined as Drop Shipped when they are set up using the Maintain Stock Items function. Drop shipments also have purchasing activities, but drop shipments are treated differently then regular in-house stock items. Low levels are not defined for drop shipped items, so the purchasing process begins with when a customer orders the item. There are four basic steps in drop shipment purchasing, the first two being automatic.

Step 1 - Order Product: The item is entered in the customer's order. The item is marked with a ND status code, indicating that it is a drop shipped item "waiting" to be ordered.

Step 2 - Create a Drop Shipment Purchase Order: A drop ship purchase order with the customer's name and address as the ship-to destination is automatically printed in Stage 8/9 of Batch Order Processing and is either faxed or mailed to the supplier. The ND code in the customer's order for the item changes to OD indicating that the item has been "ordered" with the supplier. Note: If more than one purchasing level has been established for a drop ship item, M.O.M. automatically applies the "best buy" level when applying unit cost for purchase orders based on the total quantity ordered in the purchase order.

Step 3 - Inform M.O.M. about Delivery to Customer: Select the Product menu from the main menu. Select the Receiving & Inventory menu from the Product Menu. On the Receiving & Inventory menu, select Receive Product to display the Purchase Order List to receive all or part of the items on the purchase order. Drop ship purchase orders are marked on the list accordingly. Finally, select Process Updates to Inventory on the Receiving & Inventory menu to adjust the inventory levels in the system for the completed delivery to update the customer's order with a SH (shipped) status for the item.

Step 4 - Pay Suppliers: Select the Accounting menu from the main menu. Select the Accounts Payable menu. Select Pay Suppliers to create the payable transactions for each invoice. See Accounting Methodology for more information about processing payables.