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Applying Freight Charges Through Procurement

JTank

Member
Wednesday, 1 November 2000

Software [Version]: WorldSoftware [A73C6]
Operating System: OS/400 V4R4

I am looking for suggestions/direction regarding the following
requirements that we have.

Process: We receive raw materials from a number of suppliers. The
shipping of the product between supplier and plant is done via carriers that
we have contracted with for that purpose. Each invoice (supplier and
carrier) contains multiple line items reflecting multiple shipments (usually
a daily summary). A given carrier can operate from any number of supplier
locations. A given supplier can expect to have multiple carriers picking up
products. The end result is that a single carrier invoice will not contain
the same line items as an associated supplier invoice.

There are two forms of documentation that I have available. The shipping
document travels with the product and is generally the first document to
which we have access. The supplier/carrier invoice is the second document
and follows the shipping document. The exception to this is when our own
plants ship to other company plants utilizing our billing system. In this
case the billing system will provide the equivalent of the invoice overnight
and the shipping documents follow.

Requirement: We need to be able to match the shipping documents with
both the supplier and carrier invoices. If only dealing with the material,
it would be an easy matter. The need to account for the freight clouds up
the picture. Is there an easier way to handle this situation than use the
shipping documents to create multiple purchase orders (one for each supplier
and carrier being used) and receiving against the purchase order using the
invoice as the receiving document.

The information regarding freight processing from a procurement need has
been scarce. Any help in answering these issues would be appreciated.

James Tank
Lead Systems Analyst - MIS
RMC Pacific Materials, Inc.
 
G

Guest

Guest
To: jdeworldml@jdelist.com
From: JTank <JTank@RMCPMI.com>
Reply-to: jdeworld@jdelist.com
Subject: Applying Freight Charges Through Procurement
~~0:284

Wednesday, 1 November 2000

Software [Version]: WorldSoftware [A73C6]
Operating System: OS/400 V4R4

I am looking for suggestions/direction regarding the
following
requirements that we have.

Process: We receive raw materials from a number of
suppliers. The
shipping of the product between supplier and plant is
done via carriers that
we have contracted with for that purpose. Each invoice
(supplier and
carrier) contains multiple line items reflecting
multiple shipments (usually
a daily summary). A given carrier can operate from any
number of supplier
locations. A given supplier can expect to have multiple
carriers picking up
products. The end result is that a single carrier
invoice will not contain
the same line items as an associated supplier invoice.

There are two forms of documentation that I have
available. The shipping
document travels with the product and is generally the
first document to
which we have access. The supplier/carrier invoice is
the second document
and follows the shipping document. The exception to this
is when our own
plants ship to other company plants utilizing our
billing system. In this
case the billing system will provide the equivalent of
the invoice overnight
and the shipping documents follow.

Requirement: We need to be able to match the
shipping documents with
both the supplier and carrier invoices. If only dealing
with the material,
it would be an easy matter. The need to account for the
freight clouds up
the picture. Is there an easier way to handle this
situation than use the
shipping documents to create multiple purchase orders
(one for each supplier
and carrier being used) and receiving against the
purchase order using the
invoice as the receiving document.

The information regarding freight processing from a
procurement need has
been scarce. Any help in answering these issues would be
appreciated.

James Tank
Lead Systems Analyst - MIS
RMC Pacific Materials, Inc.
 

Mike Dupaix

VIP Member
James,

Are these scheduled orders? It sounds as if you receive product with no PO. or the PO is created after the fact.

One solution would be to assign weights to your raw material, and add a freight cost based on the received weight. This would increase the purchased (inventory) value and credit the freight account. The freight addition is a 'holding account' and the actual freight bills/invoices expended against the same account. Periodically, the account is reviewed to see if the accumulated amount is close to zero.

There are many companies that use this method as freight amount is such a small part of the overall product cost.

> To: jdeworldml@jdelist.com
From: JTank <JTank@RMCPMI.com>
Reply-to: jdeworld@jdelist.com
Subject: Applying Freight Charges Through Procurement
~~0:284

Wednesday, 1 November 2000

Software [Version]: WorldSoftware [A73C6]
Operating System: OS/400 V4R4

I am looking for suggestions/direction regarding the
following
requirements that we have.

Process: We receive raw materials from a number of
suppliers. The
shipping of the product between supplier and plant is
done via carriers that
we have contracted with for that purpose. Each invoice
(supplier and
carrier) contains multiple line items reflecting
multiple shipments (usually
a daily summary). A given carrier can operate from any
number of supplier
locations. A given supplier can expect to have multiple
carriers picking up
products. The end result is that a single carrier
invoice will not contain
the same line items as an associated supplier invoice.

There are two forms of documentation that I have
available. The shipping
document travels with the product and is generally the
first document to
which we have access. The supplier/carrier invoice is
the second document
and follows the shipping document. The exception to this
is when our own
plants ship to other company plants utilizing our
billing system. In this
case the billing system will provide the equivalent of
the invoice overnight
and the shipping documents follow.

Requirement: We need to be able to match the
shipping documents with
both the supplier and carrier invoices. If only dealing
with the material,
it would be an easy matter. The need to account for the
freight clouds up
the picture. Is there an easier way to handle this
situation than use the
shipping documents to create multiple purchase orders
(one for each supplier
and carrier being used) and receiving against the
purchase order using the
invoice as the receiving document.

The information regarding freight processing from a
procurement need has
been scarce. Any help in answering these issues would be
appreciated.

James Tank
Lead Systems Analyst - MIS
RMC Pacific Materials, Inc.







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david_mallory

Well Known Member
James,

I concur with Mike Dupaix's advice, if as he says the freight is a small
percent of purchase cost of your raw mat. If you are buying aggregate at $3
a ton, then freight could be significant percent. I would look at what data
you get on the freight invoice, and see how you could match it to supplier
invoices and/or warehouse receipts. Date of shipment, point of shipment,
pounds, material type, etc. Then periodically take a sample of freight
invoices and match them to supplier invoices, or to your receiving reports,
and see if a) the trips billed match with product received, and b) the
freight rate is right. Might have to do this manually: match freight bill to
data on OW screen. Look for a carrier that is inaccurate or padding his
bill, then check that carrier more often.

It sounds like you are not doing PO's ahead and receiving against them and
matching to the receipt. If you want to discuss what method you are using
and what might be implemented, e-mail or call me direct and we can review.

Dave Mallory Denver Water 303-628-6456
 

JTank31

Member
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As we prepare for a move from World to OneWorld Xe, a part of our
charter is to attempt to replace some of our in-house applications with JDE
functionality.

We currently have an in-house application to facilitate the tracking
of raw materials. With this application we enter material and freight ticket
information using the shipping documents generated by the vendor. The cost
information, at this point, is identified using contract tables (both vendor
and carrier) within this system. The material and freight invoices are later
entered (separately) into this system. The cost information and quantities
on the invoice are compared with the stored ticket information. If the
information is valid, the tickets are flagged as being processed (for
whichever invoice was processed) and prepared for a batch process that
generates voucher information that is transferred into the A/P system via
the Z1 process.

This allows us to track each ticket from both a material and freight
standpoint. It is important to note that the freight costs can exceed the
material cost depending on other factors (distance/density). It is safe to
say that the freight component is a significant portion of the cost of the
product.

Ideally, we would love to be able to take some of the functionality
of the Sales Order and Transportation Management modules and integrate them
into the Procurement module. I have not been able to find if this
functionality currently exists within JDE.

James
 
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