Transcript Introduction to Business Concepts CE 000000

Business Functional Areas
1. Pre-Sales
(special thanks to Geoff Leese)
Objectives
At the end of this lecture you should be able to…
1. List the main functions of a Purchasing department
2. Explain some of the problems associated with
purchasing.
3. List the documents associated with purchasing
4. Describe the information flow within a Purchasing
Department.
5. Describe the role of IT within a Purchasing Department
These objectives relate to LO 1 – Concepts, theories and principles related to the
use of computing in business, and Indicative content – Functional areas of
business, marketing sales and production etc.
Making a Profit is easy….
• Make something for a LOW cost
• Sell it for a HIGH cost
• But is it that simple?
The Manufacturing Cycle
Raw
Materials
Labour
Work in
Progress
So - what is
difficult about
that then?
Finished
Goods
Packaging
Storage
Despatch
Invoicing
Receive
Payment !
Let’s think about Purchasing Raw
Materials
What is the main role of a Purchasing
Department ?
1. Make sure the raw materials needed by the
production dept are always available
2. Get the right prices
3. Pay your suppliers
Is it that simple?
Let’s add a bit more detail…
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Deal with Suppliers
Sounds like
Collate Materials requests
there may be
some
Produce Purchase Orders
paperwork
Check what the supplier sends
involved!
Record omissions, faults, errors
Return goods and request credit
Receive Invoices from suppliers
Check paying for what was received
Receive statements monthly
Pay suppliers – usually after 30 days credit
Let’s add the documentation…
Supplier database,
Sales catalogues etc
Job requests,
low stock listings etc
Deal with Suppliers
Collate Materials requests
Produce Purchase Orders
Check what the supplier sends
Record omissions, faults, errors
Return goods and request credit
Receive Invoices from suppliers
Check paying for what was received
Receive statements monthly
Pay suppliers – usually after 30 days credit
Purchase Orders
(POs)
Goods Received Notes
(GRNs)
Discrepancy Note
Goods Returned /
Credit Request
Purchase Invoice
(Unapproved)
Purchase(PIs)
Invoices
(approved for payment)
(POs)
Supplier
Statements
Payment Authorisation
Payment +
Remittance Advice
Purchase order
•
•
•
•
Used to order goods or services
Completed by the buyer of the goods or services
Sent to the seller
Contains
–
–
–
–
A specific reference number
Product code
Quantity
Signature of person in charge of purchasing
Delivery note
•
•
•
•
States what goods are being delivered
Completed by seller of goods
Sent to the buyer
Contains
– Numerical reference
– Purchase order number
– Details of goods supplied
– Signature of person receiving goods
Goods received note
•
•
•
•
Records what goods have been delivered
Sent by the buyer of the goods
Kept by the buyer
Contains
– Details of the goods received
– Condition of the goods
Credit note
• A refund document that reduces the amount
owed by the buyer
• Sent by the seller of the goods
• Kept on file by the buyer
• Contains
–
–
–
–
Buyer details
Seller details
Amount of credit
Reason for credit
Statement of account
• Normally issued at the end of each month to
inform buyer how much is owed
• Sent by the seller
• Checked by the buyer against invoices and
credit notes
• Contains
–
–
–
–
Seller details
Buyer details
Invoice numbers
Credit note numbers
Remittance advice
• A document sent to the buyer stating that
payment is being made
• Contains
– The account number of the buyer
– The invoice number
– The credit note number
– The payment amount
Check you know…
Document
Supplier catalogues / price lists
Materials requests
Purchase Orders
Goods Received (added to Stock Records)
Discrepancy notes
Goods Returned
Credit notes
Purchase Invoices
Supplier Statements
Payment Authorisations
Remittance Advice
Stock issues (deleted from Stock Records)
produced
by?
Sent
to?
Purpose?
A Typical Process Model….
• First list your elements…
External Entity
Process
• Then assemble your model…
Data Flow
Data Store
Production
Dept
P. Orders
Supplier
Collate +
send orders
Receive +
Check Goods
Stock Records
GRNs
Handle
returned goods
Returns
Credit Notes
Receive
Invoices
Credit Notes
Statements
Supplier
P Invoices
Issue
stock?
Statements
Authorise
Payments
Payments
The IT System
• Remember most of these data stores will
be presented to the user in a combined
form – the Purchase Ledger
What does the IT system do for the
Production Dept?
• Holds stock records – produces routine reorder lists
• Holds copies of orders sent
• Allows GRNs to be matched against orders
• Automatically updates stock with GR
• Hold records of all transactions on each
account – invoices, credit notes, payments
etc.
• Allows payments to be matched to account
• Can produce management reports – routine
and ad-hoc.
Management Reports
• Lists purchases by time period, by
supplier, by category, by production job,
etc.
• Lists accounts for payment, in due date
order
• Shows total value of stock held
• Produces budget forecast – help with cash
flow planning
What IT CAN’T do
• Physically handle stock
• Check goods received for errors etc.
Think about….
• Where is the purchasing department in your
organisation?
• What extra issues are there for a global
company – like MacDonalds
• Tesco has a centralised purchasing function.
Give 3 advantages and 3 disadvantages.
• What information would the purchasers need
from the local store managers?
• What sort of computer system might support
the Tesco Purchasing Dept?
Summary
At the end of this lecture you should be able to…
1. List the main functions of a Purchasing department
2. Explain some of the problems associated with
purchasing.
3. List the documents associated with purchasing
4. Describe the information flow within a Purchasing
Department.
5. Describe the role of IT within a Purchasing Department
These objectives relate to LO 1 – Concepts, theories and principles related to the
use of computing in business, and Indicative content – Functional areas of
business, marketing sales and production etc.