Purchasing priority

When you review a Purchase Entry Recommended Replenishment Action Report (PO RRAR) in the Purchase Demand Center Entry, the reports listed in the grid are sorted by the purchasing priority. There are six levels of priority. The Rush priority is designated by an operator during sales order entry, but the others are designated based on automatic calculations that occur during processing.

Note:  Reports that do not show a purchase priority level have been manually created from the Purchase Demand Center Entry, which does not assign a priority.

You can set the sort order that the levels are displayed. Use Product Replenishment Setup to set the order. In Search, select Company and access the Priority tab. Then, click and drag a level to the appropriate postion. For example, to make Document Ties show first in the grid, click and drag the field to the first position.

By sorting this way, your priority level is displayed first. Product lines that do not meet the priority criterion fall to the bottom of the report. These product lines can be ignored until you must meet a target line buy, or vendor minimums for discounts or free shipping.

When the PO RRAR is processed, a product line could qualify for more than one priority setting. For example, the line might be both, a Rush Purchase Order, and Below Order Point.

In the Purchase Demand Center Entry grid, the level with the highest priority setting is displayed in the Purchase Priority column. The grid also contains these columns: Rush, Order Point, Critical, NPNA, and Documents. These columns show the number of product lines designated at each of these levels. For example, the number designated as Rush may be 3. The Order Point may be 29. The Critical Point may be 7, NPNA may be 0, and Documents may be 10. Knowing these numbers can also help you prioritize your workflow.

Rush

Orders that must be expedited are assigned a Rush priority by the operator during Sales Order Entry. This designation is retained by the product throughout the replenishment cycle if there is not enough stock on hand to fill the order.

Critical Point

This designation identifies products that are ranked A through x. X is whatever rank you have specified for Critical Point in Product Replenishment Setup-Priority. Products are deemed to be in a critical buy situation when the purchasing net available falls below the critical point. Critical Point is calculated using this formula:
  • Order Point - Safety Allowance Quantity = Critical Point
Purchasing net available (PNA) is the sum of the product’s available stock level, calculated using this formula:
  • On Hand - Reserved - Committed - Backordered +On Order + Received = PNA

Purchasing net available is updated constantly, as orders are entered, invoiced, or received.

Below Order Point

This designation enables the buyer to review product lines that contain products whose quantities are unusually low. When the PO RRAR report option, Apply Halfway Rules, is Yes, products are found with a purchasing net available (PNA) that has fallen below order point and whose class is 1-4. The system logic applies half-way rule to increase the order quantity. The half-way rule to increase order quantity is calculated using this formula:
  • Order Quantity + {[(Order Point + Line Point) ÷ 2] - PNA}

This formula adds an amount to the order quantity that is the equivalent of having the PNA midway between order point and line point. This action tends to keep these products in sync with the rest of the product line. In sync is where each product’s PNA is between order point and line point at the time of the PO RRAR.

Negative Purchasing Net Available

When a product’s PNA is less than zero, this value is an indication that the product has been back ordered. PO RRARs with products that have a negative PNA (NPNA) are prioritized in the Purchase Demand Center Entry based on the setting in Product Replenishment Setup-Priority.

Document Ties

Ties are, for example, sales orders or warehouse transfers. If products are tied to other documents within the system, this is indicated in Purchase Demand Center Entry by a total displayed in the column labeled Documents. This total indicates the number of lines on this PO RRAR with ties.

Normal Priority

All other product lines are designated has having a normal priority. The buyer may choose to only review those items above the normal priority items in the Purchase Demand Center Entry.