Solution Design – Purchase Cycle : AUA Industria Ltd.

Standard ERP by HansaWorld

Solution Design Document

Purchase Cycle

Prepared for : AUA Industria Ltd. (AUA)

Prepared by : SoftIQ Technologies Ltd. (STL)

Contributors:
John Maina
Naomi Maina

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Solution Design – Purchase Cycle : AUA Industria Ltd.

Table of Contents

1. Introduction......................................................................................................... ..3

2. Requirements ..................................................................................................... ..4

3. C urrent Set up...................................................................................................... .6

4. Recommendation ...............................................................................................17

5. Conclusion.......................................................................................................... .20

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 Solution Design – Purchase Cycle : AUA Industria Ltd.

1. Introduction

The purpose of this document is to highlight the current setup of AUA Purchase Cycle
i.e. Purchase Orders, Goods Receipts, Purchase Invoice, Payments, returned Goods
to Supplier, Debit Notes and to give recommendations on the best practices.

This document gives an overview of the solution, specifying how HansaWorld (HW) will
be used and a list of workarounds found in the Workshops that were carried out with
the various AUA stakeholders.

The Solution Design document aims to ensure that both AUA and SoftIQ Technologies Ltd.
(STL) understand the requirements, why we need to implement the solution and how AUA
will use HW as a solution for its Purchase Cycle.

In summary, the document has the following purposes:

 To ensure that the understanding of AUA needs are correct

 To ensure that best practices are employed throughout AUA Purchase Cycle
 To ensure that both STL and AUA agree and understand the solution to the needs.
 To be used as a reference tool during the specification for customization
 To identify workarounds for needs that may not be covered with Standard HW
 To be used as a reference tool during training/testing.
 To be used as reference tool after installation (Help Document).

The Solution Design has been based on the requirements Workshop carried out with the
Client.

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Solution Design – Purchase Cycle : AUA Industria Ltd.

2. Requirements

2.1 Purchase Orders

Need to Capture the PO No.

Need to Capture the Supplier Code and Name

Need to Capture the PO Date

Need to Capture the Payment Term

Need to Capture Our Reference

Need to Capture the Attention

Need to Capture the Objects

Need to Capture the Reference

Need to Capture the purchase salesperson

Need to Capture the Order Type

Need to Capture the Currency type and exchange rate

Need to Capture the Language

Need to Capture the Extra Costs

Need to Capture the Order Type

2.2. Suppliers

Need to Capture the Supplier Code

Need to Capture the Supplier Name

Need to Capture the Supplier Payment Terms

Need to Capture the Supplier PIN No

Need to Capture the Supplier Phone No

Need to Capture the Supplier Primary Contact

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2.3 Contacts
Need to Capture the Contact Code

Need to Capture the Contact Name

Need to Need to Capture the Contact Phone No

Need to Capture the Contact Email

Need to Capture the Contact purchases salesperson

2.4 Purchase Quotes

Need to Capture the Purchase Quote number

Need to Capture the Supplier Code number

Need to Capture the Supplier Name

Need to Capture the Project

Need to Capture the Date

Need to Capture the Payment Terms

Need to Capture Our Reference

Need to Capture the Attention

Need to Capture the Objects

Need to Capture the Reference

Need to Capture the Order Class

Need to Capture the Inclusive Amount for the Quote

2.5 Purchase Invoices

Need to Capture the Purchase Invoice Number

Need to Capture the Supplier Code

Need to Capture the Supplier Name

Need to Capture the Invoice date

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Need to Capture the Purchase Invoice Payment Terms

Need to Capture the Purchase Invoice Transaction date

Need to Capture the Purchase Invoice due date

Need to Capture the Supplier Invoice number

Need to Capture the expense A/c number

Need to Capture the description

Need to Capture the Invoice amount

Need to Capture the Currency and exchange rate

Need to Capture the Creditor’s A/c code

Need to Capture the Order type

3. Current Set Up

3.1 Suppliers
Suppliers will be created from the contacts list which is available in purchase
ledger module. Switch Module >>Purchase Ledger>>Registers>>Contacts

The contacts window will open showing all contacts, i.e. both suppliers and
contacts.

When you click Create [New contact] the Contacts' window is opened or a duplicate of
the highlighted Contact when you click Create [Duplicate].
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The Contacts window will open showing headers such as:

Supplier Code No, Name, Supplier Category, Click on the box ‘Supplier’

The contacts window displays 11 cards namely:

Contact, Delivery, Terms, Pricing, Company, Accounts, E-records, Web, Comments, User
Defined, and Notes.

The Supplier Card Opens with the following crucial fields: Invoice Address,
Country, Telephone Number, Email, Fax, Mobile and Website.

User can specify Payment terms of supplier under the card ‘Terms’

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Admin who creates the Suppliers should input PIN number under Vat
Registration number as shown below.

Once all the necessary fields have been filled, User can now proceed to create
Purchase order or Quote.
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4.2 Purchase Orders

Purchase Orders will be created from in the Purchase Order module, select 'Purchase
Orders' from the Registers menu, or click the [Purchase Orders] button in the Master
Control panel.

The 'Purchase Orders: Browse' window is opened, showing Purchase Orders already
entered.

It displays the Purchases List showing some necessary fields such as No,
Status, Date, Location, Reference. Supplier code, Name of Supplier and Total
amount.
The 'Purchase Order: New' window is opened, empty if you clicked [New] or
containing a duplicate of the highlighted Purchase Order.

When you click Create [New Purchase Order] the 'Purchase Order New' window is
opened or a duplicate of the highlighted Purchase Order when you click Create
[Duplicate]

Click New and the Purchases Order window Opens.

At the top of each purchase order is the header which contains the Purchase
Order Number, the Supplier Number and Name.

The purchase order has six cards namely:

Terms, Items, Currency, Del. Terms, Comment,
99 Ord. Address, Extra Costs.
 Solution Design – Purchase Cycle : AUA Industria Ltd.

You can be able to view the following crucial fields:

Item, Quantity, Unit, Description, Unit Price, % and Sum.

 Item: Specifies a stocked item.

 Quantity: Specifies the number of items to be purchased.
 Unit: Specifies the unit of measure in which the Purchases is held in inventory
 Description: Specifies a description of the Purchases
 Unit Price: Specifies the price for one unit of the Purchases in Local Currency
(LCY)
 Sum: Specifies the total cost of items to be purchased.
 Date: Specifies the date of purchase order.
 Payment terms: Specifies the period and terms of payment AUA has with suppliers.
 Our Reference: Specifies the Quotation Number from the Supplier
 Attention: Sales Quote Project number
 Objects: Project number
 Reference: Internal tracking number like Customer/ Project name
 Purchase salesman: Person creating the quote
 Project: The Project for which the goods are being purchased.
 Purchase Order Class: Whether it is International or Local Purchase Order

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For International Purchase Order, user can define exchange rate for the goods under the
Card ‘Currency’ by inputting a figure for Base Currency 1 as the currency for which you
will buy goods say Dollar or Euro, and Base Currency 2 as the currency for which you will
pay the goods say Kshs.

You will also need to define ‘language’ under the card ‘Del Terms.’

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User can capture extra costs that affect landing price of goods/ stock. Such costs include:
Insurance, IDF fees, Bank Charges and GOK fees.

Once user is satisfied with the purchase quote, tick on the check box for Okay and save.

4.3 Goods Received

When goods which had been ordered are delivered, Stores will proceed to issue goods
receipt. Goods receipt is created from purchase order.

Goods receipt will open in a new window displaying the details on the purchase
order.
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In case you need to make changes in the goods receipt, you can adjust accordingly, say
in the case of partial deliveries, and adjust the quantity appropriately.
You should choose the location, in this case being the main store.
Language refers to LCL for Local and ICL for International goods.

In the case of an internal LPO, the Goods Receipt will show Language ICL and on the
exchange rate there will be International currency and conversion rate to Kshs.

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In case of partial delivery say first delivery was 2 items, you can receive by adjusting
quantity to 2 then okay and save. You can receive the balance later by going to the
LPO>>Goods receipt and you will be able to see the remaining two items in the goods
receipt window, displaying 3 items. If everything is in order, okay and save.

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Goods receipt has similar fields like the PO. It has headers comprising of Item, Quantity,
Currency, Extra Costs, Freight and Comment.

4.4 Purchase Invoice

Purchase Invoices will be created from in the Purchase ledger module, select 'Purchase
Invoices' from the Registers menu.

The 'Purchase Invoice Browse' window is opened, showing Purchase Invoices already
entered.

There are two types of Purchase Invoices:

1. Purchase Invoices from Suppliers’ Invoices.

In the case of a payment through an Invoice, click on create new Purchase Invoice.

The Purchase Invoice window will open showing the following fields:

Purchase Invoice Number, Supplier Code, Supplier Name, total amount, Expense A/c, and
Description.
Put the invoice date and Supplier’s Invoice number. Reference is most likely the month.
If the Purchase invoice details are in order, you can okay and save.
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2. Purchase Invoices from Goods Receipt

To create purchase Invoices related to Purchase Orders, first create goods receipt. Once
Goods receipts has been okayed, you can save and create Purchase Invoice from the
goods receipt. On the Goods receipt window, click on Create ‘Purchase Invoice.’

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Purchase Invoice window will open showing the details below:

4.5 Payments
In this topic, we shall cover two types of payments:
4.5.1.Prepayments for Local and International Suppliers
For local supplier: pay against Local purchase Order so that goods can be supplied.
For International Suppliers: pay against Invoice (Proforma or actual).
To make Payment, go to Switch Module>>Purchase ledger>>Registers>>Payments
Payments window will open, showing payments which have been already made.
To process a new payment, click on create ‘new payment.’
Payments window will open showing the following fields.
Payment Voucher Number, Payment date according to Supplier payment terms eg 30
days, Payment Mode is the bank where you are paying from.
Reference is the Project description
Tab 1- Invoice number, leave it blank since Accounts Payable is yet to receive invoice.
Tab 2- Input Supplier code
Under Tab: Sent Value- key in amount to pay supplier.

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In Flip C- key in Cheque number

In Flip D- key in prepayment number

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If the details are correct, proceed to tick check box ‘Ordered’ then ‘Ok’
Also attach the PO number on the tools box.
In the case of an Intenational Supplier: bank amount will be in foreign currency but sent
value will be in local currency(Kshs).

4.5.2. Normal Payments

To be able to make a normal payment for Supplier Invoices e.g. utility bills:
Switch Module>>Purchase ledger>>Registers>>Payments>>New
A new payments window will open
Payment mode is bank you pay from eg Oriental BAnk
Payment date is Cheque date
Reference is the supplier/ project description
Bank amount is invoice amount
Comment is the Supplier name/ Project name
Paste Special in Inv No column and select purchase invoice being paid for.
Enter amount being paid in sent value.
Select Flip C >> Cheque No. >> enter cheque no.
OK and save payment.

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5.0 Solution Workflow for AUA Industria

5.1 What to do when a customer places an Order for a certain item:
There are two processes: Supply of goods and Project
5.1.1.1 Supply Only, goods sourced locally
When a customer calls the office, Sales will take the call, preferably Adhil or Hassan.
They will confirm with stores if the said item is in stock. If the item is available, a
quotation is done in the system and sent to the client for approval.
If the item is not in stock, Adhil/ Hassan will procure the said goods from suppliers.
Sales quotes of less than Kshs 100,000 do not need to go for approval.
If Quotation is okay, stores will place an order by going to Purchase Order on the
system.
There are different payment terms depending on terms of engagement with the client.
Once AUA receives Purchase order from the client, stores will attach it to the system.
Adhil/ Hassan will create project in the system, create project budget, and sales order.
Depending on scope of work, Adhil/ Hassan will send email to stores to prepare goods
for dispatch.
Accounts will be alerted to invoice.
Once goods are okayed for dispatch, the stores person will send invoice
accompanying goods to client’s location.
If items required are not in store, stores will inform Adhil, and buy locally then supply to
customer.
5.1.1.1 Supply Only, goods sourced internationally
If missing goods are to be sourced internationally, stores will procure proforma Invoice
from International supplier, either Hassan or Adhil will approve.
After receiving proforma Invoice, Hassan will create purchase order, and put in TT
requirements either on email, and update live sheet that is shared with accounts to
send payment out.
Accounts will negotiate for exchange rate and send payment out.
Accounts will revert with swift copy of transaction and Adhil will share with supplier.
There is a process of logistics before goods arrive here at the main store. Logistics
includes: Inspection, Transport, Freight, delivery of goods.
Stores officer will receive goods and check if goods received match proforma invoice.
She will proceed to issue goods receipt. 20
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Stores will look at Exchange rate, Freight and extra charges and forward this
information to Adhil/ Hassan who will calculate cost of items, do a mark up and
indicate selling price.
However this function (Job costing) should be handled by Accounts (Inputting the extra
costs in the system)
Once the new items have been given their new prices, stores will prepare goods for
dispatch and Accounts will issue invoice to client.

5.1.1.2 Supply of goods for a Project

Project work involves operation, e.g. supplying goods to a construction site which will
last for months or work that will take two days, which has milestones.
The coordinator will send invite to Adhil/ Hassan, and print relevant project documents
e.g. quote, Purchase order from client, Invoice copy, bills of material and share with
operations team.
Invoicing is done based on Milestones achieved e.g. Job on site from Operations or
Project leader or delivery of shipment or completion.
This is where terms like 70% on order, 20% on delivery, 10% on completion come into
play.

5.2 Receiving Stock

When consignment comes, stores will do goods receipt. Stores Officer will receive
request from Adhil, Hassan to issue goods. She will do delivery note on the system
and use project number to issue materials.
If goods are returned, she will issue a return goods on the system.

5.3 Return Goods

Once goods have been delivered on site, they might need to be returned maybe
because of breakage or they are faulty.
If the goods are returned from the project site, a return goods can be created.
Module >> Stock >> Goods Receipt >> Return Goods
Enter the quantity of the items that has been returned, the location and the reason
(RMA) - Return to Manufacturer.

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On Flip C: Will be the Cost Price from the Goods Receipt (i.e. including Freight,
Customs and other Extra Costs).

If everything is okay, you can now Ok and Save.

5.4 Deliveries
Module>>Sales Orders>>Registers>>Orders>>Delivery

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The delivery window will open displaying the goods which have been dispatched for
delivery.

5.5. Return Goods after Delivery

Sometimes, goods will be returned to AUA after having reached client site. This may be
due to different reasons like breakage, faulty items, etc.
In this case, User will need to create return goods from delivery.
Switch Module>>Stock>>Deliveries>>Return Goods

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Adjust quantity accordingly. You can then Ok and Save.

Currently, there are no debit notes being done in the system, but the suppliers issue credit
notes for goods returned from project site.

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