Purchasing lets you manage all aspects of ordering and receiving materials and services, including requisitions, approvals, purchase orders, receipts, and returns. It supports purchasing of products as well as non-product materials and services—such as subcontracting services—and gives you the means to support discrete, process, and just-in-time (JIT) manufacturing.

While purchasing supports the purchase of everything—from office supplies to capital equipment for production—this course limits the example to purchasing direct material for manufacturing.

A purchase involves several steps. Often the first step is a requisition, which is the result of demands recognized by material requirements planning (MRP). An order is next, either a purchase order, a blanket order, or a supplier schedule. When the ordered goods arrive, a record is made called a receiver. If the goods are returned to the supplier, another record is made. The system keeps a record of each step.

After goods are received, Accounts Payable manages the receipt of an invoice from your supplier and matching it with the receiving documents generated by the system so that payments can be made.

You will review several of these stages of the purchasing process in more detail on the following pages, but before you can perform purchasing functions, a supplier must exist in the system. So this chapter begins with a discussion about entering supplier information.