How to Auto-Generate Purchase Orders

Autogenerate Purchase Orders

You can auto-generate purchase orders to replenish your inventory stocks on a regular basis. With the Auto  Generate Purchase wizard, you can set purchase orders to be automatically generated based on the sales trend or from the defined item reorder points.

In determining when to generate a purchase order, you need to review and compute the potential stock or the quantity of items in stock at a given time. You can use the following formula to calculate for the potential stock:

   Quantity of items in Stock
– Quantity of items on Sales Order
Quantity of items on Purchase Order
Quantity of items in transit to the warehouse from other warehouses
___________________________________________________________
= Potential Stock

If the potential stock is negative, then you need to fill your stock to fulfill the sales orders. We can also take the sales trends into account in addition to computing for the potential stock. To do this, we need to add this value to the potential stock:

Average Sales x Lead Time
where:

  • Average Sales – the average sales of an item
  • Lead Time – the time it takes for the supplier to receive an order up until the items are received in the warehouse

Set Up Lead Time

To set up a lead time for an item,

  1. Go to the Inventory module > Item > Find Item and select items from the list. The Inventory Item detail form will be displayed. 
  2. Go to Costing tab > Supplier Ship From and indicate the lead time for the item in the Lead Time column.
  3. Click Save and Close to apply changes.

If there is no lead time, set up for the item in the Costing tab, the system will get the lead time defined in the Setup tab > Default Lead Time of the Item Detail form.

If you want to set up lead times for multiple items specific to a supplier,

  1. Go to the Supplier module > Supplier > Find Supplier and select the Supplier from the list. The Supplier detail form will be displayed.
  2. Go to Items tab. Select the item in the Special /Promotional Pricing section.
  3. In the Part Codes section, click the (+) to view the item's Ship From details.
  4. Enter the lead time for the item in the Lead Time column.
  5. Do the same procedure for all items in the list. Once done, click Save and Close to apply changes.

Set Up Reorder Point

To set up a reorder point for an item,

  1. Go to Inventory module > Item > Find Item. The list of inventory items will be displayed.
  2. Select an item from the list. The Inventory Item detail form will be displayed.
  3. Go to Location tab > Item and indicate the reorder values for the item in the Reorder Point field of each location. Click Save and Close to apply changes.

Alternatively, you can also set up reorder points in a batch per location. To do this,

  1. Go to Inventory module > LocationFind Location.
  2. Select the location from the list to display the Location detail form.
  3. Go to Stock Total > Setup and enter reorder values in the Reorder column for all items in the warehouse.

Use Supplier Minimum Quantity

If you want to validate the quantity of items to be ordered in the Purchase Order, (regardless if you are using sales trends or reorder points to autogenerate the purchase orders), you can enable or disable the Use Supplier Minimum Quantity option.

This feature is only available starting Connected Business v14 and higher.

If check, the system will autogenerate the purchase orders based on the value of the Quantity to Order or the minimum quantity set by the supplier, whichever is higher.

If the supplier minimum quantity is higher than the generated quantity to order using sales trend / reorder points, the system will follow the minimum quantity set by the supplier.

If the supplier minimum quantity is lower than the generated quantity to order using Sales Trend or Reorder Point, the system will generate the purchase orders based on the sales trend or reorder points.

If unchecked, the system will autogenerate the purchase orders based on the values defined in the sales trend or reorder points.

You can check the supplier minimum quantity from the Inventory Item detail form > Costing > Supplier Ship From > Min. Order Qty column. If no minimum order quantity is indicated, you can ask the supplier directly for the information and enter the value.

Auto Generate Purchase Order Using Sales Trend

You can use recent sales trends to calculate the items to order. Note that the item must have lead time details set up before the system can determine the quantity of items to be ordered. To autogenerate purchase orders using sales trends,

  1. Go to Supplier module > Purchases > Auto Generate Purchases. The Auto Generate Purchase Order Wizard will be displayed.
  2. Tick the Use Sales Trends option and indicate the time span for the sales trend. Click Next to continue.
  3.  In the Location page, select the location you want to use for generating the purchase orders. Click Next to continue.
  4. In the Supplier page, select the supplier where you want to order the items from. Click Next to continue.
  5. Click Finish. The Auto Generate Purchase Order window will be displayed with the list of generated purchase orders. 

    The quantity of items to be ordered is indicated in the Qty to Order column. You can click on the quantity value to view the criteria used in calculating the quantity of items to be ordered.

  6. Select the purchase order to process and click OK. A message prompt will be displayed indicating that a purchase has been created. Click Yes to view the purchase order.
  7. Modify the Purchase Order details as needed. Once done, click Save and Close to apply changes.

Auto Generate Purchase Order Using Reorder Points

You can use reorder points to calculate the items to order. Note that the item must have reorder points set up before the system can determine the quantity items to be ordered. To autogenerate purchase orders using reorder points,

  1. Go to Supplier module > Purchases > Auto Generate Purchases. The Auto Generate Purchase Order Wizard will be displayed.
  2. Tick the Use Reorder Points option and click Next to continue.
  3. In the Location page, select the location you want to use for generating the purchase orders. Click Next to continue.
  4. In the Supplier page, select the supplier where you want to order the items from. Click Next to continue.
  5. Click Finish. The Auto Generate Purchase Order window will be displayed with the list of generated purchase orders.

    The quantity of items to be ordered is indicated in the Qty to Order column. You can click on the quantity value to view the criteria used in calculating the number of items to be ordered.
  6. Select the purchase order to process and click OK. A message prompt will be displayed indicating that a purchase has been created. Click Yes to view the purchase order.
  7. Modify the Purchase details as needed. Once done, click Save and Close to apply changes.
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