Category Archives: Purchasing
We are often asked about vendor invoice processing using a vendor portal. There are many different ways of automating the exchange of vendor invoices which leads to a certain amount of confusion as to how you should solve this business problem. The reason that invoices are more complex to manage than, for instance, purchase orders is that purchase orders are created in a system that you control while invoices are usually created in your vendors systems.
Since the invoices often originate in your vendors system, the complexity is in providing a means for them to transmit those invoices to you as well as to convert the invoice data from their format into your format at one end or the other of the transmission.
There are several ways that your vendors can transmit the invoices to you. Some common methods are: Direct FTP file exchange or the use of web services and the older Electronic Data Interchange (EDI). Files can also be uploaded manually using the functionality of our vendor portal, presuming that your vendors can provide the invoice data in the correct format.
Another way that your vendors can provide you with an invoice is to take a purchase order in the portal and “flip” it into an invoice. This “flipping” is a function in the portal that creates an invoice that mirrors the PO line for line and provides entry fields for the vendor to make any modifications based on specific quantities shipped etc.
There is one other way to deal with invoices presuming that you have a purchasing system that can support evaluated receipt settlement (ERS). ERS modules generate pre-matched vendor invoices within your purchasing system based on the purchase order prices as well as the amount of goods received. These invoices can then be extracted from your system and presented to your vendors for confirmation in the same way that you would send them a purchase order.
You will usually need to provide several of these methods to your vendors to allow for their different technical capabilities.
There are many ways to automate your Purchase Order processing. Often people look to solutions that add automatic faxing or emailing capability to your purchasing system. While these solutions do remove the need to manually print and send your purchase orders to your suppliers, the process stops once the purchase order is sent. There is no provision for the management of the purchase orders outside of your organization or the processing of information coming back from your suppliers.
In this article, I will review some of the benefits that you can realize by using a proper “2-way” communication system such as the B2B Connex Supplier Portal. An on-line supplier portal not only displays the purchase order detail, but also provides the ability for the supplier to make change requests or attach additional information by accessing your system using a browser.
How often have you lost track of the status of a purchase order that you have sent to a supplier? When an order is faxed or emailed, there is no way to ensure that the supplier has received it without a manual follow-up. When a delivery is late, you may find out by running report from your ERP system, but again, any expediting would be done manually.
With a “2-way” communication system, your suppliers would enter their order confirmations electronically when they receive their orders. Any order that hasn’t been confirmed within a few days would be flagged by the system and expedited electronically. There is no way that an order could “slip through the cracks”. In a similar way, orders that are not fully received or shipped by the required date would be flagged and expedited by the system without any manual intervention.
Delivery Date Confirmation
With a “2-way” communication system, suppliers are asked to confirm delivery dates with their electronic order confirmation. They are also given the opportunity to inform you of changes to those delivery dates right up to the time of shipment.
While changes to delivery dates for an order are never desirable, providing a means of tracking the changes and updating your ERP system electronically will lead to more accurate production and maintenance schedules.
Price Change Requests
Similar to delivery dates, your suppliers can be given the opportunity to confirm the prices on a purchase order at the time of order confirmation. In fact, when done electronically, an acceptance of a purchase order by your supplier is their guarantee that the price is correct. If it is not correct, they have the ability to request a new price when confirming the order rather than waiting until it is time for the invoice.
This means that there should never be a difference in the price on a purchase order and its related invoice. This can eliminate invoice match problems. Also, by managing this process electronically, you never have to worry that price changes negotiated verbally or by email will be lost before they are entered into your ERP system.
Evaluated Receipt Settlement (ERS)
Once you have eliminated invoice match problems, you could be ready for the next step – Evaluated Receipt Settlement.
ERS is the process of auto-generating supplier invoices within your ERP system based on the quantity of received goods and the purchase order price. This can only be done if you are sure that the purchase order prices are correct. Once the invoices are auto-generated they can be sent for payment without requiring that your supplier send you an invoice. This eliminates all of the manual tasks of receiving invoices and entering them into your system. It also removes the need for your supplier to create and send their invoices to you.
Procurement professionals that belong to the Purchasing Management Association of Canada will be attending a show October 22-23 2010 Beyond 2010: The Future of SCM located in Toronto, Ontario Canada.
David Kuehner, President of B2B Connex has been selected to discuss hidden savings in your supply chain.
Many people consider purchasing to be an overhead expense. However, the automation of your purchasing processes can have a big impact on costs, cycle times, and the accuracy of price data. There are several ways that manual processing can add to your overall costs. Inaccurate pricing can cause invoice match problems, incorrect delivery dates can cause maintenance scheduling problems, rekeying RFQ data can introduce errors in your vendor data that will cause recurring purchase order change requests until the data is corrected. One way to solve these, and other problems, is to implement a “2-way” vendor communication process that will control the distribution of Purchase Orders, RFQs, and other purchasing documents to your vendors, as well as to control the communication of price, delivery, and other critical information from your suppliers back to you.
Registration for the event is relatively inexpensive and is still open to those that are interested in meeting B2B Connex and learning more about achieving savings within purchasing.
What savings have you been able to extract from your supply chain?
1. Include attachments with a PO sent/received via the supplier collaboration portal. Attachments may include specifications, check lists, diagrams, etc. These attachments may be in the form of a Word document, Excel spreadsheet, JPG, BMP, VSD, etc.
2. Include add-on information with a PO sent through the supplier collaboration portal (e.g. FOB information). This feature is of particular importance with material purchases.
3. Vendor to confirm/acknowledge a PO through a supplier collaboration portal, resulting in a subsequent update to the ERP PO to indicate it was confirmed by the supplier.
4. Vendor to suggest changes to a PO through a supplier collaboration portal. Critical changes include Price, Quantity and Delivery date, Terms and Conditions.
5. Vendor to easily review the orders sent to them and the Purchase Order processing status (e.g. Changes accepted, under review, cancellation, etc.)
6. Easily review the orders being managed via the supplier collaboration portal, and the Purchase Order processing status (e.g. Changes accepted, under review, cancellation, etc.).
7. Accept PO changes proposed by the Supplier, resulting in the creation of an ERP PO Change Order to facilitate PO updating.
8. Reject PO changes proposed by the Supplier.
9. Buyer and the supplier to negotiate PO changes via the supplier collaboration portal until such time as the buyer accepts (most important) or rejects them.
10. Audit trail of accepted and rejected changes be maintained to provide tracking of all communications between Buyer and the Supplier. It is also desirable for proposed changes to be tracked
Are there features missing on this list that you would include? Please feel free to comment and provide your suggestions
How to add efficiency to the procurement department without requiring your suppliers to implement EDI
- Pricing, delivery and any other negotiation are easy to work within the B2B Connex supplier portal
- Automatic expediting of a purchase order based on business rules defined per supplier, per plant location
- Revision control over B2B documents exchanged
- Viewable worklists to highlight areas of priorities
- One document source to work with, no knowledge of different standards required
- Images of products and engineering drawings and msds are available for the supplier to confirm product specifications which in turn improves supplier quality
- B2B Connex requires no middle service like a VAN (value added network) to exchange business documents
- Invoice matching is a reduced or totally eliminated by using B2B Connex
- Works easily with smaller trading partners. Typically trading partners needs infrastructure to handle EDI communications
What are your experiences with implementing EDI with smaller trading partners?
The following describes a typical purchasing scenario between buyer and supplier with the B2B Connex Supplier Portal
1. The supplier is notified by e-mail
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2. The supplier easily navigates from the e-mail to the B2B Connex Supplier Portal application
3. The supplier views the new PO and decides on the appropriate action
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4. The supplier may request negotiable changes as required. Negotiations can be completed on a price, quantity and delivery date
5. The buyer sees the supplier’s response on a work-list
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6. The buyer views the request for a change
7. The buyer acts on the request, and accepts/rejects the change
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8. The purchase order change is sent back to ERP from the Portal
The B2B Connex solution provides a simple and easy to use supplier portal to help facilitate a 2 way negotiation between a supplier and a buyer. The solution provides everything a buyer needs to communicate with suppliers while removing:
– telephone calls
Additionally, the B2B Connex supplier portal provides a process for tracking PO fulfillment and an audit trail of activity, available for reporting.