In this lesson, we will discuss how you can automatically create purchase orders to replenish your stock, by using the Purchase Order Wizard screen in ManageMore Business Software. This powerful function, which is part of the purchasing management features of ManageMore, can analyze your stock and your past sales, make projections for future sales, and create the Purchase Orders necessary to fill the stock to desired levels.
Why do I Need the Purchase Order Wizard?
Without the Purchase Order Wizard, you would have to run a Low Stock Report to determine which items to order, and manually enter the items on a purchase order. You could also select a vendor on a blank purchase order, and use the Auto Fill button to select and add items to order for that vendor based on the the stock levels. While these methods are okay if you have a small number of items and vendors, the Purchase Order Wizard is a much more powerful tool, to create multiple orders for all items at once.
Step 1 – Start the Purchase Order Wizard, Select Location
To begin, select Activities … Accounts Payable … Purchase Order Wizard. You will be presented with the screen below. Here, provide the location for which you would like to generate Purchase Orders. If you have only one location, or you would like to generate for all locations, you can leave this field blank. Keep in mind, you can add multiple sets of items with different criteria before creating the PO’s, so you will be able to go back to this step before finishing.
Step 2 – Item Selection Criteria
In the next step, you can enter filter criteria, to limit the selection of inventory items to a particular set. Enter or selct a Vendor Id to select only items assigned to that vendor. Enter or select a Specific SKU Item, analyze that one item only. Enter or select a Category Id, Department Id, Manufacturer Id, and/or Season Id, to select items assigned these values. Note that items must meet ALL of the criteria provided to be selected for analysis.
Step 3 – Enter Calculation Criteria
This is the most important step of the wizard, which will determine the method used to calculate the quantity needed for your items.
There are two methods, each with several options:
Analysis of Past Sales
This method computes an average daily sales amount, and calculates the quantity to order based on a number of days sales to keep on hand.
(Average Daily Sales x Number of Days to Keep) – Amount Available – Amount already on Order = Total Amount to Order
To compute the average, you can select to perform a standard mean calculation (straight average of all days considered), or use one of two smoothing methods meant to compute a truer picture of the daily sales by eliminating outliers (unusual days of high or low sales). The default is Chauvenet’s Critereon (named for William Chauvenet). The number of Days Sales to Keep on hand can be set for each item, in the Reordering Info section on the bottom right of the General tab for each item. If blank, a standard number of days to keep for all items analyzed can be specified in the next step.
Stock Level Status
This method looks at the on hand value, and orders items that are below the reorder point. For this method, you can choose whether to order enough to reach the Maximum Quantity for each item, Economical Order Quantity (EOQ) specified for the vendor, or Best Fit (the greater of those two values). IMPORTANT: To use this method you will need to specify a Reorder Point, Maximum Quantity, and (if used) an Economical Order Quantity for each item. The reorder point and maximum quantity are set in the Reordering Info section on the bottom right of the General tab for each item.
The Econmical Order Quantity (EOQ) is set on the Purchasing tab for each item.
Step 4 – Additional Calculation Criteria (Past Sales Method)
If you chose the Analysis of Past Sales method in the previous step, you will be presented with additional criteria to determine how the sales and amount to order are calculated.
Date Range
Select a range of dates for which sales will be examined to determined the average sales per day.
Increase / Decrease Percentage
Enter a percentage by which to increase, or negative percentage to decrease the average sales for your calculation.
Days Sales to Keep
Enter the number of days sales to keep for each item. This will only apply if the number of days sales to keep is blank on the individual items examined.
Business Days
Uncheck any days of the week your business is always closed, or otherwise do not want to include in the calculation.
Advanced Options
These options allow you to consider lead time (as defined in the inventory item) in the calculation. This will add additional days to keep, since the items take time to be delivered. You can also optionally consider refunds, to reduce sales calculations. These are normally not considered, since the items were actually sold, but returned. Finally, you can allow the system to use the Economical Order Quantity (as defined on the Purchasing tab of the item) if it is greater than the quantity calculated.
Step 5 – Review and Adjust Item to Order
After the calculation, you will be presented with a list of qualifying items. You can then edit these items, to adjust the quantity to order manually, or change the vendor from which to order. You can also remove any items that you do not want to order at this time.
Step 6 – Select More Items
Here, you can decide to go back to step one, and select more items, based on different criteria. For example, you can select a different location, category, or department. You can even specify a different calculation method for the new set. This will keep the existing items selected, and add the new items to your list. Any item already chosen will not be reselected. Note: If you choose the “Back” button instead to go back, the items already selected will be removed. If you do not want to make additional selections, click the “Next” button.
Step 7 – Confirm and Finish
On the last step, confirm the number of Purchase Orders to be created, the total cost and weight of the items, then click Finish to generate your Purchase Orders.
If you make a mistake, don’t worry. Purchase Orders can be edited or manually closed. Simply go to List … Accounts Payable … Purchase Orders. Double-click on the mistaken PO, then edit it, or click the “Close Order” button to cancel the order.
