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Lecture 7

COMM 226 Lecture 7: chapter 7


Department
Commerce
Course Code
COMM 226
Professor
Marc- Andre Leger
Lecture
7

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Chapter 7
Supporting the Procurement Process with SAP
1. What are the fundamentals of a Procurement process?
Procurement: operational process of obtaining goods and services using least time and money
with following activities:
-Ordering : can be performed by individuals in the purchasing unit within the
organization, notably the purchasing manager.
-Receiving: The order for procurement would be sent to the supplier who will in
turn deliver materials and/or services to the organization. In turn, these materials
and/or services must be received by the organization to take ownership of them.
This step in the process is generally handled in the warehouse by the warehouse
manager (usually only for materials, not services).
-Pay : Ownership of the materials and/or services results in a liability or an
obligation to compensate the supplier with payment. The accounting department

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would then be responsible for settling this liability by sending payment to the
supplier.
Supporting the Inbound Logistics Process within the Value Chain
Procurement of raw materials needed for production
Information Systems Silos: Activities in the procurement process are separate, non-
integrated systems that were created to serve the needs of the different functional areas
involved in the process. Unfortunately, having these systems silos adds steps to the
process, and means that multiple databases will be used to complete the procurement
process.
Sales DB: Monitor demand for materials
Purchase Order DB: Manage purchase order information
Warehouse Database: Manage inventory levels
Accounting DB: Manage payables
2. What were the problems with the Procurement process before
SAP?
Warehouse Problems
Manager lacked sales price data.
Accounting Problems
Three-way match for payment was a challenge (between the purchase order, goods
received and the invoice from the supplier).
Correcting discrepancies were labor intensive
Time delays in updating accounting data
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