Automatic creation of Purchase Order when the PR is approved

Dear All,

As promised in my previous post, i’m back with a post which answers few Purchase requisition related questions and confusions.

For this post, I am considering the case where the Procurement department directly decides the supplier from its previous procurement history and I assume that the company doesn’t go for RFQ.

In AX2012, the procedure of “Automatic creation of purchase orders” is completely changed which is now, not as simple as enabling a parameter in Parameters form (which we normally do in AX2009). It is now can be achieved by defining a Purchasing policy rule in Procurement & Sourcing> Purchasing policies.

The improvements to this area are really welcoming as it meets the industry requirements and standards. Below is what can be done in AX2012 but not possible in AX2009.

• As this is combined with policy frame work, we can set up the system to have the Purchase orders created automatically when it meets the specific condition.

Ex: All the purchase requisitions lines whose value is less than 5000(assuming “low value procurement” doesn’t need high attention by the procurement users) should automatically converted as Purchase orders when the PR is approved. Other PRs which are not crossing this value must be processed manually and PO must be created.

Running the “Automatic purchase order creation” as a batch job: we can run this automatic PO creation as a batch job, advantage of this is, PR will not be immediately (based on the batch job recurrence settings) converted as POs upon PR’s approval. So that, consolidation of PRs is possible.

Ex: Suppose for ItemX, one PR is raised by finance team for quantity 5, another PR is raised by HR team for quantity of 10., As we are processing PO creation as batch job, once if both the PRs are approved, one PO will be created for two PRs with a consolidated quantity of 15.(Assuming that both the PR lines have same supplier)

Now, Let us see how to do it and then probably you can find some more ways on how better you can use it for your requirements.

Important notes:
->PO will be automatically created only if Purchase requisition Line has a vendor account specified in the “Vendor” field in the PR line.
->When the requester is creating the PR, the vendor will be automatically filled in if the item has a vendor linked in its Item master.
->Preparer cannot change the vendor account whereas the reviewer or approver can.

Go to Procurement and sourcing>Setup> Policies> Purchasing policies and create new policy with name “New”
Move the current company to “Selected organizations” Box.
Purchase policy
Image: purchasing policies
In policy Rules Fast tab> Select the Policy rule type “Purchase order creation and demand consolidation rule”> click on “Create Policy rule”

In the fast tab “Manual purchase order creation”, select check boxes “Automatically create purchase orders” and “Run Automatic purchase order creation as a batch job”.
policyrule
Image: policy rule

Go to Procurement and sourcing>Periodic> purchase orders>Batch Purchase order generation
Set “Number of purchase requisitions in a single task” field to 5. (Every 5 approved PRs will be processed in a single batch job)

 In the tab “Batch”, do the below settings to add it to the “Batch jobs”
Batch purchase order generation
Image: Batch Purchase order generation
Once if we click “OK” on this form, it creates a new record in the Batch jobs form.
To see the newly created batch job, Go to System administration>Inquiries> Batch jobs
batchjobs

Now, Everything is set. You can create a purchase requisition and approve it, to see a PO created automatically by the system. Remember that the PR Line should have the “Vendor account” to have the PO created automatically.
Create a PR and approve it as per your approval Hieararchy. Check the PR status is “Approved”. Once if the PR is approved, leave the record and wait till the batch jobs runs(may be 5 mins and it will vary based on batch jobs queue).
Go back to the same purchase requisition,now you can observe that the PR status is changed “closed” which means that the PO is created by the system and thus the status is changed to “Closed”. Also, in the form parts, you can notice the PO number.
PR
Conclusion: Setting up the system to “create a PO Automatically” reduces the procurement team’s time in raising the PO and also it reduces the turn around time of PR to be converted as PO.

Hope you like it. Feel free to write to me if any queries in the discussed funcionalities and your suggestions and comments are well appreciated.

Keep DAXing!

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17 thoughts on “Automatic creation of Purchase Order when the PR is approved

  1. Hey Sunny,

    Thanks for writing such good blogs.

    I have question for you regarding PR’s, if I have 3 or 5 PR’s from different users or locations and all of them have a common item in it, when I make a PO it creates 3 or 5 different lines in the purchase lines but it is difficult to send such PO’s to a vendor where same item is repeating again and again with same or different quantities.

    Have you faced this issue or know any work around for this?

    Any feedback will be appreciated.

    Regards,
    Vishal Mehta

    • Vishal, Thanks for reading and encouraging through your comments.

      Surprisingly, we dont have a way in AX2012 to have only one line created in the PO when the 3 PRs have the same item. In short, as per your example, if you have 3 PRs for same item(itemx) then the PO that will be created through these PRs will definitely have 3 lines in it.

      But, I feel that there are some valid reasons which makes this functionality little tougher. Combining all the PRs of the same item could be possible in very less cases i.e., only when the PR lines have the same Inventory dimensions and Financial dimensions. In case, if the multiple PR’s have different inventory and financial dimensions you can not combine them as it impacts other things.

      Despite all the reasons, i agree with you that MS could have still provided some way to consolidate the multiple PR lines of same item.

      • Thanks for very very useful content in this blog.

        Where to define the conditions for Automatic and manual PO creation. As per your example, Purchase requisition lines whose values 5000 (xxx currency) should be manually converted to PO.

        Your reply will be highly appreciated.

        Regards,
        Bala

      • Balasubramanian, Thanks for reading. To specify the conditions you will need to select the third option in the screen shot – . when u select the third option, you can see the space where you can specify the conditions.

        Keep visiting for interesting blogs……..

  2. Thanks for sharing… I have doubt, How the user will be get notified once the PO is generated for the particular users PR?

    Thanks & Regards,
    Sathish.

  3. Hi Sunny ,

    Ex: Suppose for ItemX, one PR is raised by finance team for quantity 5, another PR is raised by HR team for quantity of 10., As we are processing PO creation as batch job, once if both the PRs are approved, one PO will be created for two PRs with a consolidated quantity of 15.(Assuming that both the PR lines have same supplier)

    In the above example , if the user wants to create the Two purchase orders because departments are different .

    What would be the solution?

    • I’m not seeing any problem here, though it is one PO created by the system it will have two lines in the PO, line1 represents “Finance”department(dimension), line2 represents HR department. It gives you complete ability to trace it in the future.

  4. Sunny – Is it safe to assume that the check box for “run automatic purchase order creation as a batch job” must be checked, and the corresponding batch job must be setup? I would like to think that if you leave it unchecked, that the PR would be released to a PO once the PR has been approved via workflow.

    • Blair, it is obviously safe to have that parameter checked, though it is checked your PR must be approved as per your workflow configuration and only an approved PR will be considered for Automatic PO creation.

  5. Dear Mr Sunny,

    Thanks very much for the detailed post and patient replying to the queries.

    Referring to the query made by Mr Balasubramanian, above, (setting up of value limit to the PR say 5000) If you can kindly elaborate the steps, it will help.

    you have mentioned to click the third option in the screen shot, but there is not much clarity which screen shot you are referring to.

    Thanks in advance

    P.Subramanian

  6. Dear Sunny,

    I have one question here, i have set two different workflow for PR and PO, if my PO flown from PR workflow is not triggering if i create PO manually my workflow will trigger as per my condition.
    My requirement is, after processing PR and RFQ i ill go to Released approved PR and i will convert PR into PO, once PR converts into PO my purchase order workflow should trigger currently it is not happening for PO flowing from PR and RFQ and it is happening for manually created PO.

    Awaiting for your valuable response.

    Thanks in advance,
    Manju

  7. can we convert single PR to multiple PO. for example:- if i have 100 nos of PR for x product, Can i split the same for 2 vendors in 2 different PO

    • Hi Kalidoss,
      If you have two PR lines in a PR, then you can have two POs created. But, if you have one PR line with 100 quantity you can’t split the quantity into two different POs. I hope it is clear.

      Thanks,
      santosh

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