Setting Up: Procured Items, Purchase Terms

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Transcript:

Hello, and welcome.

In this video, we’ll show you how to set up procured items and their purchase terms.

In MRPeasy, items can be either produced or procured. Produced items are manufactured in-house, while procured items are purchased from suppliers.

Let’s assume that our company manufactures wooden tables.

A table consists of four table legs, one tabletop, and half a liter of varnish. Since the legs, tabletop, and varnish are purchased from suppliers, they will be set up as procured items.

Let’s start with the table leg.

Go to the Stock section and create a new item.

Enter the item details, such as the description and product group. Select the appropriate unit of measure and set the item type to Procured, since it is purchased from a supplier rather than manufactured in-house.

Since we do not plan to sell table legs separately, set “Not for sale” to Yes. This excludes the item from product selection in customer orders, quotes, and invoices.

You can also attach documents, images, drawings, or 3D model files to the item. These files will be accessible from various places throughout the software.

Next, define a default storage location and a reorder point. The reorder point determines when the system alerts you that stock is running low and replenishment may be needed. It is recommended to define a reorder point for every item, even if the value is zero.

Finally, save the item.

Once the item has been saved, the Purchase Terms section appears on the item details page.

Purchase terms allow you to define vendors and the conditions under which an item is purchased, such as pricing, lead times, minimum order quantities, supplier part numbers, and other purchasing details.

The software uses purchase terms to estimate item costs and to automatically select suppliers and purchasing conditions when creating purchase orders from the Requirements report or the Critical On-Hand report.

Let’s create the first purchase term for the table leg.

Add a vendor, for example, Red Wood Inc.

For this supplier, specify the lead time, purchase price, and minimum order quantity.

Lead times are calculated in business days, allowing the system to accurately plan purchasing and production schedules.

Let’s enter the price of one piece and a minimum order quantity.

We will add another purchase term for a discount price when a larger quantity is bought.

Now that the ‘table leg’ item is set up, let’s move on to the ‘table top.’ Because it’s supplied by Red Wood as well, we can simply copy the ‘table leg’ item and modify only the fields that differ, making the setup much quicker.

We will also add two additional vendors for the table top: ‘Green Wood Inc.’ and ‘Black Wood Inc.’, along with their purchase terms.

In each purchase term, we’ll enter the vendor’s part number. This part number will appear on the purchase order sent to the vendor.

Now the table top has multiple purchase terms, each with its own priority and price.

When the system estimates the procurement cost, it uses the purchase term with the highest priority. If multiple purchase terms have the same priority, the system selects the one with the lowest price.

It is also possible to manually choose a different purchase term when creating a purchase order by clicking the ‘Vendor Part Number’ field and selecting the desired option.

Lastly, we will create the item for “varnish.”

We will define a new unit of measurement: liters.

We purchase varnish in 5-liter cans. We will configure the purchase terms so that purchase orders are sent to the vendor in cans, while the received quantity is automatically converted into liters for our inventory management.

This allows us to purchase using the vendor’s unit of measurement while managing stock in our preferred unit of measurement.

Because the vendor supplies varnish only in whole cans, we will enable the Indivisible UoM setting to prevent purchasing fractional quantities.

In this video, we demonstrated how to set up procured items, vendors, and purchase terms.

Thank you for watching. Be sure to check out our other demo videos to learn more about MRPeasy.

To learn more about the functionality of MRPeasy, please see our other videos!