Purchase order planning

Purchase order planning is part of the Sage Distribution and Manufacturing Operations supply chain management processes that manage your stock so that the right amount of items are available when needed to meet customer demand.

An MRP calculation request forecasts demand for your released and other items. It matches your supply of components, raw materials, and stock items with current and future demand for the items, identifies stock shortages and estimates how much stock needs replenishing to minimise excess stock.

MRP calculation results are replicated on this page. Generated recommendations that satisfy these stock shortages display in a simple list by company, site and item. For each suggestion, you can analyse what to purchase and/or manufacture, by which date, and the type of demand that creates the anticipated production.

On this page, you can initiate your procurement processes quickly and easily from the suggested MRP calculation results. To place timely orders for restocking your items, you can combine several of the recommendations together on one purchase order. This is an efficient way of managing your supply chain operations and an effective way of ensuring suggested materials are available at the required times to fulfill your schedule.

Review the list of suggestions

The list of suggestions generated by the MRP calculation is grouped into weekly buckets per company, site and item.

1 suggestion per requirement per weekly bucket is generated where the potential requirements exceed any supply of the item. The generated suggestions include an uplift to component quantities when a Scrap factor % is defined on the bill of material. Supply and demand transactions with a due date in the past are included in the calculation for the first weekly bucket.

MRP is calculated as: (Total supply + Starting stock) – Total demand – Safety stock

The date of the first requirement in the bucket is the Sunday of the appropriate weekly bucket.

The suggested Order date is from the calculated due date. Purchasing suggestions consider the item-site Purchase lead time.

1. In the main view, analyse the suggestion details and replenishment information.

   If all lines are correct, you can create purchase orders from the suggestions. Go to Create purchase orders for external suppliers.

   If data such as a supplier name is missing or a site needs changing, select the line to edit the suggestion details.

2. The purchasing site and supplier name is displayed by default. You can change both.

   If the Purchasing site is blank, you need to enter or select the site.

   If the Supplier is blank, you need to enter or select the supplier.

   The suggestion prices change to reflect your item-site-supplier rules.

3. Leave the Purchase quantity of the Item.

   The Purchase quantity represents the order quantity that MRP has calculated produces the best schedule, subject to the specified item-site replenishment rules and MRP calculation request criteria.

4. You can leave the remaining fields as the default values or you can enter your own values:

   • Purchase unit: The Stock unit defined for the item.
   • Order date: The default planned Order date is the MRP calculation request Start date.
   • Expected receipt date: The date that the item needs to be available to meet the demand.

5. Leave the Gross price for the Item.

   The Gross price is calculated automatically from the supplier prices if the Supplier name is displayed by default. You can increase or decrease the default price per unit.

   If the Gross price is zero or blank, enter the price per Stock unit for the item.

6. Close the record.
7. Repeat steps 1 to 6 for each suggestion you want to edit before you add it to a purchase order.

Create purchase orders for external suppliers

The displayed list of suggestions are from the item-site records included in the latest MRP calculation results set. Each time a new MRP calculation is requested, any item-site suggestions for a released item included in the MRP calculation request overwrite item-site suggestions on this page. This could mean that a suggestion is deleted altogether if the MRP calculation determines stock of an item is sufficient to meet any demand for that item.

1. In the main view, select the lines to combine onto purchase orders.
2. Select Create order, then on the information message select OK to confirm.

3. When you select OK, the items and associated prices are loaded onto as few purchase orders with as few purchase order lines as possible. The following rules are applied:

   1. For lines with an identical Purchasing site + Supplier + Order date: Create a single purchase order.
   2. For each combined purchase order created in a, for lines with an identical Item + Purchase unit + Expected receipt date + Gross price: Create a single purchase order line.

   3. Set the purchase order Status to Draft.

4. Each suggestion created as a combined or a single purchase order is deleted from the main view.

   To let you know that the purchase orders are created, a notification displays in the Notification centre. Select the link from the notification to go to a filtered list of the created orders in the main list on the Purchase order page.

   A notification also displays if data needed for a purchase order is missing.

   On the Purchase order page, you can add attributes and dimensions, edit order lines, and submit a purchase order for approval. See the Purchase order page for further information.

5. On the MRP calculation page, the Suggestion status for the corresponding line in the MRP calculation results set is set to Ordered.

Delete a suggestion

You delete a suggestion from the MRP calculation page. When you delete an MRP calculation result set, all suggestions on this page generated by the MRP calculation are deleted at the same time.

Working with MRP calculations and results

Refer to the list of questions in this section for guidance on how to use your Sage Distribution and Manufacturing Operations solution to carry out day-to-day planning tasks.

• What constitutes demand for the MRP calculation?
• Does the MRP calculation analyse requirements for the levels in a bill of material?
• Does the MRP calculation nominate a preferred supplier for a suggested purchase order?
• How does MRP calculate when and what to purchase or manufacture to satisfy demand?
• A suggestion has been generated for an item that has not been ordered by a customer. Why?

What constitutes demand for the MRP calculation?

Demand comes from:

• Sales orders, sales quotes (optional), and any demand for components and raw materials
• The item-site Safety stock level

• Demand transactions with a due date in the past

  These are considered to be demand not delivered on the MRP calculation Start date.

The MRP calculation matches your supply of components, raw materials, and stock items to the demand and generates a suggestion where the potential requirements exceed any supply. The MRP calculation checks the Safety stock level at the end of each weekly bucket calculation. If the calculation takes the quantity of Accepted stock below the safety stock level for the week it generates a suggestion for the weekly bucket. If there is insufficient stock available, the MRP calculation generates:

• A Production suggestion if the item is manufactured and the item-site Preferred process is Production
• A Purchasing suggestion if the item is purchased and the item-site Preferred process is Purchasing

Does the MRP calculation analyse requirements for the levels in a bill of material?

Yes. When the Explode bill of material checkbox is selected, MRP analyses the potential requirements for a released product needed for a work order, and for its components and raw materials, according to the bill of material definition. If the MRP calculations determine stock of the released item is in shortage, MRP processes its component requirements, together with any other supply and demand to determine if there are stock shortages for its component items as well. It then creates additional suggestions to satisfy the component item stock shortages.

Does the MRP calculation nominate a preferred supplier for a suggested purchase order?

Yes, if the item to order is listed as an item that the supplier provides.

If the supplier is the default supplier for the item, the supplier is nominated. You can change the nominated supplier to a different supplier.

If multiple suppliers supply the item, a supplier is nominated. You can change the nominated supplier to a different supplier.

If the Supplier records fail to nominate a supplier, you need to select the supplier manually.

How does MRP calculate when and what to purchase or manufacture to satisfy demand?

See MRP calculation and examples for full details of the MRP calculation and worked examples.

A suggestion has been generated for an item that has not been ordered by a customer. Why?

The MRP calculation generates a suggestion where potential requirements exceed your supply of components, raw materials and stock items. As the MRP calculation also checks the Safety stock level at the end of each weekly bucket calculation it could have generated a suggestion because the quantity of Accepted stock fell below the safety stock level for the week. So although there appears to be no demand from a specific order, the suggestion could have been generated because there is insufficient stock of the item. If there is insufficient stock available to meet demand, the MRP calculation generates:

• A Production suggestion if the item is manufactured and the item-site Preferred process is Production.
• A Purchasing suggestion if the item is purchased and the item-site Preferred process is Purchasing.