Procurement SLA/OLA Management for Project Management & Accounting

What is Procurement Service Level Agreement (SLA):

A service-level agreement (SLA) is a contract between a service provider (Procurement team) and its internal end users (those who place the purchase request). It documents what services for the purchase request, procurement team will furnish and also defines the performance standards the provider is obligated to meet.

In this topic following topics will be covered in order to explain the SLA

-      Purchase requisition for the project

-      Budget check for project purchase requisition

-      Service level agreement (SLA)/ Operations Level Agreement (OLA) for purchase requisition, note that SLA/OLA starts once the budget for the project is approved by the system.

-      Submit the purchase requisition for approvals

-      Create RFQ for purchase requisition

-      Create RFQ replies

-      Bid scoring criteria and ranking for the vendors

-      Compare RFQ replies

-      Accept or Reject RFQ replies

-      Approve PR and convert the PR to PO, note that once the PO is created by the system Procurement SLA Ends.

-      Confirm the purchase order for the project

-      Receive the purchase order, after receiving the project cost is updated

-      Enter the custom duty/Miscellaneous charges and post the invoice for the purchase order

-      Enter vendor payments by using the payment journal

1.1    Purchase Requisition ProjecT

1-      Create new in the PR screen, system will generate the number for the PR

2-      Enter the name for PR

3-      For the project PR mark check in “select default project” field

4-      Select buying legal entity

5-      Select the project ID from drop down list

6-      Enter/Upload items for the PR lines

7-      Define urgency code and enter the comments

8-      Check budget for the project

Master project and Subprojectt

Master project and subproject has been created in AX

Item created automatically for Subproject

Once the project details created, the system automatically created the Subproject item in AX. This is default item for the project used to purchase all the items for the project. 

We will use one default item for the project related purchase, the item model group for this item will be stocked.

Note: Inventory will be consumed for the project once the item is received against the purchase order for the project.

Project Categories and Activities

All the categories and activities available in AX, PR will be created for Project category (Material), Activity (Task3)

Project Details in Purchase Requisition

Project ID, activity number and project category already created for the project. 

Project Budget

Project budget defined for subproject at category level, the same flows successfully in procurement and sourcing module.

 

 

Create and Submit Purchase Requisition for quotation

Business user will create the PR for the project, once the item has been entered for the PR (manually or by using item upload template) the business user can check the budget and “Submit” the PR for quotation. 

 

PR received by Procurement Manager

Procurement Manager received the PR and assigned the priority (High).

Note: For the project PR, the procurement SLA will be started once the budget is approved by the system and submitted by the end user for quotation.

Below is the screen shot for SLA management. Procurement manager needs to define the priority and based on priority system will suggest the Due date and time.

 

Procurement SLA Start Date and Time: Procurement SLA starts when the Purchase requisition, created by the business user and the budget check for the PR will be approved by the system for the project.

SLA Ends Date and Time: Once the negotiation and finalisation of the vendor are completed then Procurement team will convert the same PR to PO. Procurement SLA ends once the PO is created in the system. PO creation date and time will be captured in SLA form and report.

Delegate the task to Procurement Specialist:

Procurement manager will delegate the PR to Procurement Specialist (User: Test9)

 

Workflow Notification:

Procurement manager will receive the notification for the delegated task

GO to origin and process the PR

  

Create Request for Quotation (RFQ) from PR (Purchase Requisition):

Procurement specialist will create the RFQ from PR

 

 Request for Quotation (RFQ) Created

The system has created the RFQ. Press the RFQ details DML-54 and process the RFQ

 

 Procurement specialist will enter the expiration date for RFQ. and vendors. Also, add vendors for RFQ.

Note: The RFQ lowest and highest status is "Created"

Once the vendors added, send and publish the RFQ to Vendor Portal.

 

RFQ published

Enter RFQ Reply

Enter the reply received from Vendor

Enter the reply received from 2^nd vendor

Scoring Criteria for the Vendors Reply

Before scoring the vendor replies, select the scoring criteria

Stakeholders will enter the score for the bid for the specified parameters, also rank the bid.

 

Bid Scoring

Also, enter the bid scoring for another vendor. Based 

 

Compare RFQ Replies

Procurement Manager/Specialist will Compare the RFQ replies and Accept the bid based on ranking.

Note: Once accepted, you can't reject the bid/RFQ reply.

 

Accept and Reject RFQ Replies

Procurement Manager/Specialist will post the Acceptance

RFQ acceptance has been posted in AX

 

The accepted quotes from the vendor posted in the PR form.

Also, the right side of the PR form,  the fast tab related documents displayed the RFQ number for the PR.

 

 Purchase Requisition Attachments

Procurement manager can attach the relevant files for the PR received from Vendor

 

Approve Purchase Requisition

Once the quotes received, Procurement specialist needs to approve the PR

Procurement Delegation of Authority (DOA) Approvals

As per DOA, following stakeholders needs to approve the purchase requisition.

• BUH needs to approve the PR.
• Procurement director needs to approve the PR.
• Finance Director needs to approve the PR.

 Budget Check Failure

 If the budget will be failed system will throw the below error

Note: Project manager/coordinator needs to update the budget in for the category material. The updated budget will flow from Project budget to Purchase requisition.

 

Convert Purchase Requisition to Purchase Order

In released approved purchase requisition form, business user will convert the approved PR to PO.

Press Show to view the PO details in PO form.

The business user needs to confirm the PO.

Note: PO status is approved since all the details flow from approved PR.

Note: Once the Purchase order has been created, the procurement SLA/OLA ends. The PO created date and time will be captured and displayed in SLA/OLA form.

 Post Product Receipt for Purchase Order

Post the product receipt for the PO

Receiving/GRN Voucher

 

Project Cost

Once the Product receipt/GRN has been posted for the project, the project cost has been booked for the project. 

Customs Duty/Miscellaneous Charges

The business user can enter the customs duty/other miscellaneous charges before invoicing the purchase order for the project.

The system has posted the invoice for the purchase order, below is the voucher.

Vendor account (Trade payable credited by 2000 AED)

Material and customs duty (Debited by 1900+100=2000 AED)

 

Vendor Payments by using Payment Journal

Create the payment journal for vendor disbursements/payments.

In the payment, journal lines select the vendor and perform settlement

  

In the settle open transaction editing form, select the invoice and press ok

Enter the method of payment and approve the Journal report as ready.

 

 Once the report as ready is done business user can post the journal

 Once the journal is approved business user needs to generate the check by using generate check functionality

 

 

Check has been printed on screen

Once the payment journal has been posted, the system will generate the below voucher.

Purchase Requisition Status Closed

In related document section, the purchase requisition form maintains all the reference number for RFQ, PO and Invoice.