I’m sure it’ll be no shock to hear that every company is different. With different organizations comes different requirements for ERP system builds.
When implementing NetSuite we have the standard process flows that we encourage the use of through leading practices. There are always going to be some businesses, however, that require something more.
NetSuite Advanced Procurement is one example of how we can begin to provide that something more. This module presents several ways of enhancing the standard procurement processes that NetSuite offers.
The procure to pay process flow in NetSuite is already fairly robust with a lot of opportunity for controls, data enhancements and efficiencies. Advanced procurement adds to that with some new record options and additional features.
In this article I will introduce NetSuite Advanced Procurement and it’s key attributes. I will explain the use cases for this module and how to set it up if it is the right move for your business.
What is Advanced Procurement in NetSuite
NetSuite Advanced Procurement is an add-on module that helps companies improve the controls of their procurement processes.
Although it is an add-on module, some NetSuite SKU’s may include it. To find out if you have access to the features in advanced procurement you can navigate to Setup > Company > Billing Information. Under the Add-On Modules tab you will see a Yes in the Enabled column next to Advanced Procurement if you have access to it already.
The module makes available a few new features that are designed to improve the controls around your procurement processes. Ultimately, the implementation of some or all of these new features should result in more focused spending and reduce errors and inefficiencies.
If your business is experiencing any of the following then you might want to consider speaking to your NetSuite account manager about advanced procurement.
- Poor quality Purchase Orders being raised.
- Inefficient use of the Purchase Order record.
- Poor management of preferential pricing and terms.
- Inconsistent use of preferred vendors.
- Missed recurring orders.
Key Features of NetSuite Advanced Procurement
Below are the three most important features of NetSuite Advanced Procurement and what they can do for your business.
Purchase Contracts are used to keep track of contracted pricing, terms and delivery details. The purchase contract record facilitates the recording of associated information that will then pull through to eligible purchase transactions automatically.
Organizations that have a dedicated team negotiating terms sometimes struggle with communicating that information to buyers. Common side effects are large volumes of rejected purchase orders or, at worst case, incorrect orders being placed.
It makes sense that if your business is guilty of the above then using purchase contracts will improve the efficiency of your buying team, streamline the purchase process and ultimately save you money.
The following is just some of the information held on a Purchase Contract –
- The Vendor.
- Internal Contact – The employee who negotiated the contract.
- Contract start and end dates.
- Items covered by the contract.
- Base Rate.
- Tiered pricing structure.
- Quantity Discounts.
- Terms agreed on the contract.
- Payment terms.
- Preferred carriers.
- Header level discounts.
All the above information will default on the Purchase Order when the Purchase Contract is selected in the header. For particularly complex contractual agreements, users can even select multiple contracts on one transaction to dictate the treatment of overall terms and individual line items.
To begin using Purchase Contracts you need to enable Purchase Orders and Purchase Contracts from the Enable Features page.
Needless to say that if you are not yet using Purchase Orders then you should probably considering implementing that first before even thinking about Purchase Contracts.
Purchase Requisitions add an additional step to your P2P process flow to ensure only verified, accurate and necessary requests are being raised as Purchase Orders. They also facilitate an easy and efficient ordering process for less informed business users.
The Purchase Requisition record is an additional non posting transaction that comes before the Purchase Order.
It can lack certain information required for a Purchase Order. This aspect allows users from around the business to raise a request even when they don’t necessarily know the correct vendor or even the relevant item.
The key distinctions between a purchase requisition and purchase order are as follows –
|Internal Transaction – Requisitions will only ever been seen by people within the business.
|External Transaction – A Purchase Order is intended to be sent to the vendor so is an externally facing transaction.
|The Vendor does not need to be specified.
|The Vendor must be known.
|Designed to be raised by anyone in the business.
|Normally raised by a purchasing or procurement team member.
|Costs can be an estimate.
|Costs must be accurate.
|Can be consolidated on to one Purchase Order.
|Cannot be consolidated.
|Raised when the need for a good/service is identified.
|Raised when a good/service is ready to be ordered.
Once a Purchase Requisition has been approved a member of the buying team can fill the gaps and convert it to a Purchase Order.
I’m a big fan of Purchase Requisitions for businesses with a user base over a certain size. I think they achieve what most companies are trying to achieve with their overly complex purchase approval flows.
If you want to understand more about Purchase Requisitions read this article looking in more detail at it’s purpose and how it differs to a Purchase Request.
Blanket Purchase Order
The Blanket Purchase Order is the feature you never knew you needed.
Almost every business has recurring purchases with agreed pricing that they need to raise orders for at fixed times. This is normally managed by multiple Purchase Orders being raised as and when they are required or Purchase Orders sitting in a Pending Approval state until they are needed.
Neither of the above methods are foolproof. They both require a user to remember when to send the Purchase Order. They also need the agreed pricing and terms to be entered manually on each order.
Blanket Purchase Orders automate these recurring transactions.
An initial Blanket Purchase Order is raised ahead of time with the following information
- The items to be purchased.
- The agreed pricing and terms.
- The delivery schedule.
When the delivery dates approach, individual Purchase Orders for the required quantities can be raised manually or automatically by the system
|If you have lead times set on your items, NetSuite will take these in to consideration when raising your purchase orders to meet the predefined delivery schedule.
Another added benefit of this feature is that all Purchase Orders are linked back to the original Blanket Purchase Order. This makes it much easier and quicker to find out if an order has been raised – a common issue when recurring orders are being placed sporadically and with no structure.
How Do I Enable Advanced Procurement in NetSuite?
NetSuite Advanced Procurement is an add-on module. That means that you cannot simply enable it. You first need to speak to your NetSuite Account Manager to procure the module.
Once you have purchased Advanced Procurement and it is live in your system, you will have these new features available on your Enable Features page. You can use some or all of the features given to you through Advanced Procurement.
You can enable the three features mentioned in this article on the following ways –
- Purchase Contracts: Navigate to Setup > Company > Enable Features. Check Purchase Orders and Purchase Contracts on the Transactions tab.
- Purchase Requisitions: Navigate to Setup > Company > Enable Features. Check Purchase Orders and Purchase Requisitions on the Transactions tab.
- Blanket Purchase Orders: Navigate to Setup > Company > Enable Features. Check Purchase Orders and Blanket Purchase Orders on the Transactions tab.