Procurement scenario

  • 5 minutes

Four basic steps are reviewed in this scenario based on this image.

Diagram of the procurement and sourcing scenario.

  1. Create and process a purchase requisition.
  2. Create and process a request for quotation.
  3. Create and process a purchase order.
  4. Receive and invoice products from a purchase order.

Create and process a purchase requisition

The company USMF is growing quickly and needs to purchase some new servers for the IT department. The IT Manager, has been searching for a new server and now needs to request to purchase it.

The IT manager has found servers that are close to, but don't meet all of, the requirements. They decide to create a purchase requisition for the new server, but for a new product that is not currently in the catalog. The IT manager enters the details and specifications about the server. They have also found a website that features the exact product that they want, so they enter the URL into the purchase requisition. The IT manager also includes additional accessories for the server to the requisition lines.

Next, the IT manager suggests an existing preferred vendor, Alpine Electronics, for the purchase. However, Alpine Electronics has a history of not meeting delivery date requirements. Therefore, they also suggests a new vendor, Trey Electronics, on the purchase requisition and then submits the purchase requisition for approval.

Create and process a request for quotation

When the Purchasing agent receives the new notification about the purchase requisition, they review all the information on the purchase requisition and decides to create a request for quotation (RFQ). This will allow the preferred vendor and the new vendor to bid on the new server.

Because Alpine Electronics is already set up to use the Vendor collaboration portal, the Sales manager receives a notification that a new RFQ has arrived. They log on to the Vendor collaboration portal and fill out the pricing and delivery dates for the new server and accessories. When finished, they submit the information.

Meanwhile, because Trey Electronics has not been set up to use the Vendor collaboration portal, they receive a fax from the Purchasing agent regarding the RFQ. The sales manager at Trey Electronics fills out the necessary information and faxes a copy back to the Purchasing agent.

When the Purchasing agent receives the fax from Trey Electronics, they must enter the details manually into the request for quote reply. When the Purchasing agent has finished entering the details of Trey Electronics' reply, they compare the reply from Trey Electronics to the reply from Alpine Electronics. After review, the Purchasing agent decides to confirm the bid from Trey Electronics.

Create and process a purchase order

When the Purchasing agent creates an RFQ from a purchase requisition, the reply goes back to the requisition. The requisition is then approved, and the purchase order can be created. The accepted reply goes back to the requisition, when they open the purchase order, review the information, and then send the order.

Note

The purchase order that is created from purchase requisitions or request for quotation does not go into DRAFT.

The USMF company requires all indirect procurement purchases to be routed to the Accounting department so the financial dimensions can be validated and distributed. Additionally, the budget manager must complete a budget check and approve all IT purchases.

The Accounts payable coordinator, receives a notification to review the purchase order that the Purchasing agent submitted. The Accounts payable coordinator reviews the purchase orders and assigns the appropriate financial dimensions to the order lines and distributes the amounts evenly over all corporate departments.

When the Accounts payable coordinator receives the notification for reviewing an order that is In Review, the notification is typically a task, and a work item is assigned to the Accounts payable coordinator. When they are finished, they complete the review of the order and the Budget manager, receives a notification to approve the purchase order.

The Budget manager opens the purchase order and performs a budget check. When the budget check has passed, they approve the purchase orders and the system notifies the Purchasing agent that the purchase order is approved. The Purchasing agent then confirms the purchase order and sends a copy of the confirmation to Trey Electronics.

Receive and invoice products from a purchase order

Trey Electronics receives the notification and delivers the products sometime later. The server is delivered to the warehouse because it is too large to be received in the IT manager's office. The server accessories are delivered directly to the IT manager's office.

When the server arrives at the warehouse, the Shipping and Receiving worker processes the product receipt for the server and moves the server to a special area of the warehouse designated for front office purchases. Meanwhile, the IT manager receives the server accessories in their office.

The Shipping and Receiving worker posts the product receipt of the accessories and then brings the server to the IT manager's office, the address that is indicated on the purchase order.

Subsequently, the Bookkeeper receives and processes the invoice for the purchase order. Later that week, the Accounts payable coordinator, creates a payment proposal and a check is printed for Trey Electronics.

Note

This module does not provide complete insight into the process of receiving and invoicing; only the overall processes of procure-to-purchase is discussed. For more information, refer to Configure and work with inventory management in Dynamics 365 Supply Chain Management and Perform Accounts payable daily procedures in Dynamics 365 Finance.