Using Receiving Purchase Orders

The use of purchase orders is a three-step process: entering the purchase through Purchase Orders, receiving the weight of the items through Receiving Purchase Orders, and then recording the actual quantities and costs of the product though Complete Purchase Order. Broken into these three sections, the system allows you to receive and work with inventory quickly, and only record the true cost when they are known – which is then reflected in accurate gross margin reports.

Although inventory is created in Receiving Purchase Orders, the purchase order WILL NOT APPEAR in Purchase Inquiry, Daily Purchases Report, or the Purchasing Activity Report, until the purchase order is completed through the Complete Purchase Order option. The status of all purchase orders may be viewed in Purchasing Status Inquiry.

Standard and consignment purchase order types are received the same way and create one lot for each purchase order line item received. Settlement purchase orders use a different receiving process that can be used to create multiple lots for the same purchase order line items.There are two different types of receiving: Standard and Settlement.

In Standard Receiving, one "hold" lot of inventory is created for the total receipt against a "stocked" line item on an open purchase order. These lots remain on "hold" until the purchase order is completed through Complete Purchase Orders. Hold lots are not taken into consideration in weighted average cost calculations or during cost of goods sold.

For Standard product receipts a receiving yield can be taken. That is, the quantity of an item that will be paid for does not have to equal the quantity inducted (added) into inventory. For instance, if you decide that you are only going to pay for the ten pounds of an item actually received but only add nine pounds of the product received to inventory you can create a receiving yield. For weighted average cost calculations, the weight added to the inventory (nine) will be divided into the amount to be paid (ten X the unit cost) to determine the actual cost per unit.

In Settlement Receiving, it is possible to have multiple receipts for each line item on the purchase order. In this way, one line item that consisted of a shipment of multiple lots may be inventoried by the multiple lots received. Each receipt becomes an individual "hold" inventory lot. The individual lots also remain on "inventory hold" until the purchase order is completed through Complete Purchase Order. This receiving method is used to record the purchase of random weight items where each individual weight received needs to be tracked separately in the inventory because the item info varies by each item or box received. For example: A purchase order is for 25 swordfish. Each swordfish received has a different weight, has a different grade, quality, or other characteristic(s) that need to be tracked separately in the system because each fish will be sold based on the grade, quality, etc. Rather than have a unique item code for each grade and enter 25 lines on a standard type purchase order, the individual lot type purchase order allows for one item code and one purchase order line. It also records the unique characteristics at the lot level through the item info type. See Receiving a Settlement Purchase Order for more information on receiving settlement purchase orders.

For settlement receiving the vendor's declared weights can be checked against actual weights received, but no yield is taken. The payment to the vendor is based on the received weight.

See Receiving Consignment Purchase Orders for information on receiving consignment purchase orders.

Receiving Purchase Order functionality depends upon the defaults selected in Item, Purchasing Options, User Options, Item Info and which purchase order type (standard or settlement) received was used when the purchase order was entered in Purchase Orders.

Items may be designated stocked or not. If an item is not stocked, inventory lots will not be created. Items designated Lotted = Y (Y=yes) will require entering additional location and lot information. Items received into a slotted location will need to assigned both lot numbers and slot locations.

Use the Available Actions links below for more information.

Security Required : Purchasing - Receiving Purchases