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Automatic Purchase order Creation for contracted items via MRP run


Dear All,

Kindly provide your valuable advice for below mentioned scenario to Create automatic purchase order  for contracted items via MRP run.

Scenario :

Business Requirements

80 % of A and B class direct materials are procured from contracted Suppliers.  Buyers are well known about the contracts and manually convert the purchase requisitions into Purchase orders. 

There is a scope to reduce the internal procurement lead time by removing manual touch points in procurement of such contracted Items like

  1. Automatic source assignment
  2. Batch job to convert the purchase Requisition into Purchase Order
  3. No release strategy required for such purchase order
  4. Minimum 4-5 line items should be added to single Purchase order
  5. Purchase orders should be communicated to supplier via e-mails

Management want to reduce the purchasing   administration cost and want to be competitive in the market

Further want to bring the maverick purchases under control by reducing human mistakes

Current Process flow

  1. Purchase requisitions are generated via MRP
  2. Buyer assign the Source of Supply Manually
  3. Convert the purchase Requisition into Purchase order
  4. Release the purchase order
  5. Manually checks for rates and conditions (if required)
  6. Print out of purchase order and communicate to supplier
  7. Monitoring of PO delivery
  8. Good receipt with reference to purchase order
  9. Supplier invoice verification with 3-way match

Business Challenges /Pain Areas

  1. Internal procurement lead time is high
  2. Maverick purchases are beyond control because of manual touch points
  3. Administration cost is high as most of the purchase order are reviewed before sending to suppliers

Business Volume

  1.36 Corers INR of annual of A& B class materials are procured by using contracts

  2.Today’s internal procurement lead time is range from 3 to 5 days

  3.Monthly @ 4000 Purchase orders are created for such materials

  4. All these materials are procured from 6 key suppliers

  5.Number of contracted items #16000

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