Learn How Planned Delivery Times Can Optimize Your Procurement Processes
- by Jawad Akhtar, Head of SAP Delivery, AbacusConsulting
- May 27, 2014
Authentic and accurate delivery times during which vendors deliver the requisite materials is the key to effective and efficient procurement planning.
Reading this article, you will learn how to:
- Use various options available for maintaining planned delivery times and learn how these impact the planning
- Update the Purchase Information Record
Planned delivery times improve your procurement process by suggesting the most practical and optimal delivery times for your materials. Using this functionality helps you reduce inventory carrying costs while also bringing greater visibility to material procurement planning information maintained in the system.
Whether they are involved in a new SAP ERP system implementation or an ongoing optimization of business processes, companies can use a plethora of standard reports and standard analysis tools available to optimize their business processes.
For example, at first you may have entered a planned delivery time of a procured material as three days. This information may have been based on the historical data available or from your own experience. In all procurement planning, including using the Material Requirements Planning (MRP) tool, the system plans the material with three days lead time (planned delivery time). The purchaser then creates a purchase order and the system automatically incorporates three days as lead time for delivery. The vendor delivers the material after five days, thus jeopardizing the entire planning activities. In due course, the system continues to maintain a database of all the deviation between planned delivery dates with actual delivery dates.
When a significant database is built up, and when the company has frequently procured the material over the period of time, it can make use of Calculate Planned Delivery Time functionality, not only to evaluate the deviations in planning but also to update its record for effective procurement planning in the future.
There are three distinct areas in which the process owner can maintain planned delivery times:
- Material master record: The planned delivery time entered in the material master record applies to material procured from any vendor. Normally, this is the average delivery time and is used for planning estimation purposes.
- Vendor master record: The planned delivery time entered in the vendor master record applies to all the materials that the specific vendor delivers. This option has its limitations, as some materials may take longer for the vendor to deliver than others.
- Purchase Info Record: A Purchase Info Record (short for Purchase Information Record) is a one-to-one procurement relationship of a material that is obtained from a specific vendor. It contains the option to enter the planned delivery time it takes for a vendor to deliver the material. When the process owner creates the purchase order for the vendor and material combination, the system looks for the purchase info record for relevant information. If no purchase info record exists, then the system automatically creates one, and also keeps on updating it with procurement-related activities and information. After you create a new purchase order, the system only considers planned delivery time from the material master or from the vendor master.
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