Handling PA

| 3 minutes

To pass the information about the products and quantities the Customer is interested in, as well as other related information, Purchasing and Sales Dept. will use the following document in the System:

  • Purchase Agreement (PA).

This SOP will explain what PA is, how to use it and will list the steps of how to handle PA.

Getting started with PA (Purchase Agreement)

After SO is created and PA is generated by Sales Dept., Purchasing Manager will check the PA and assign it to the Purchasing Person that will handle it. PA is the document used to pass information from SO to Purchasing Dept. Purchasing Dept. doesn't have access to Sales Order, therefore, Salesperson is responsible to pass the information over to Purchasing Dept. by creating PA and keeping it updated.
  • Purchase Agreement is the main document used to pass information about products specifications and quantities from Sales Dept. to Purchasing Dept. It should be constantly updated with the most recent information in case of any changes in product specifications, packaging requirements or quantities.
  • Purchase Agreement is a mirror of Sales Order.
  • Purchase Agreement displays the list of products needed for a specific inquiry or order.
  • Purchase Agreement is the source of all other RFQ related documents - POs (which are used to quote prices and place orders with Vendors), Bills (which are used to make payments to Vendors), etc.

PA Stages

PAs have 4 main stages that reflect the status of any inquiry or order, from a draft to confirmed or cancelled. Stages are visible after accessing a specific PA.

  • Draft: Initial stage at which PAs are created after Sales Dept. generates a Purchase Agreement document from the SO. Draft purchase agreement contains a list of products that Salesperson needs to get prices for.
  • Confirmed: Stage that appears after Purchase Agreement was checked and approved by Purchasing Manager and passed to Purchasing Dept.

Note: Only Purchasing Manager is authorized to confirm a Purchase Agreement.

  • Bid Selection: This stage is used when one (or many) RFQ(s) document(s) were selected from a collection of created Requests for Quotation (under the same PA). This stage is not going to be commonly used in sales business flow.
  • Closed: This stage is used when PA document is not needed anymore so it can be closed. Same as Bid Selection stage, this stage is not going to be commonly used in sales business flow.

In addition, there are invisible PA stages that only appear after a specific action is applied.

  • Ordered: Purchasing Dept. will move PA into this stage when order is finished and is being closed.
  • Cancelled: Purchasing person or Salesperson will move PA into this stage when document is not required anymore (e.g Customer cancels the order, PA was created by mistake, etc.).

This document is mainly oriented to explain how to use Purchase Agreements.

Functions of PAs

PA is a mirror of SO. Salesperson has to constantly keep PA updated, otherwise Purchasing Person will not know the final products, quantities and packaging requirements. In addition to using PA to create new POs, Purchasing Person needs to know the following functions:

1. Updates. Every time some details in SO have changed and Salesperson clicks 'UPDATE PA', when Purchasing Person opens it there will be visual differences. PA uses colors and text weight (bold vs. normal text) to make it easier for Purchasing Person to notice the changes.
Colors. Changes in products specifications. Any changes in product specifications (product attributes, product packaging) or product quantities will be reflected in PA by color highlights.
- Orange: indicates changes in product specifications (product attributes, product packaging).

- Red: indicates changes in product quantity. Only the quantity field will be highlighted red in this case, while the whole line will remain orange.

Bold text. New products added to the PA will be displayed in bold. This should make it easier to see which products are new and which products are old.

2. 'CHECK ORDERED' button. PA has functionality to see previous orders of the same Customer. To do that, Purchasing Person simply needs to click 'CHECK ORDERED' button on top, and the System will display the list of PAs that belong to orders of the same Customer that finished production.
Note: This becomes possible only when 'ORDERED' stage is being used to close the orders. The search results will show PAs that are currently in this stage - which means the production is finished and the orders are closed. To see the orders in production Purchasing Person needs to manually search POs in Purchase Order stage, by adding Customer Refernce filter.

The process of how to create POs from PA is described in Handling PO SOP.

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