Purchase Items to Inventory

Process Group/Policy Details

• Subject: Inventory

• Process Group: Purchase Into Inventory

• Title of Policy: Purchase Into Inventory

• Effective Date: 07/01/2014

• Approved/Revision Date: 07/01/2014

• Approved by: State Controller

Process Group Description

• • The process group includes all related tables necessary for the purchasing, receiving, discrepancies, and invoicing of commodities into the State of Colorado’s warehouses.

Rationale or background to policy:

• • This policy is needed to standardize warehouses’ procedures and processes for effectively processing stock requisitions and managing reasonable levels of inventory. Inventory Management system allows for an entire procurement lifecycle including requisitioning, purchasing, receiving, and tracking.

Policy Statement:

INV.PO.06 Purchasing into Inventory

• • Departments shall use the Universal Requestor transaction to begin the requisitioning of goods and commodities into inventory. This transaction allows users to purchase off of master agreements. In the event that a master agreement does not site a needed commodity code, a Standard Requisition Transaction should be utilized (See Procurement Policy and Procedures for more information).

Procedure:

INV.PO.04.PR.01 Purchasing Items from Inventory

• • Departments shall use the Universal Requestor transaction (UR) for the requisitioning of purchases into inventory from either a punch-out catalogue or from a master agreement. Once a UR transaction has been issued, then an Inventory Purchase Order may be issued, which encumbers funds needed on the financial transaction. Finally once the purchase order is processed and those items are received, the Receiver Transactions (RC) can be issued for Inventory transaction as well as non-inventory transactions.

  • The start of the ‘Purchasing into Inventory’ cycle shall begin with a Purchase Requestor Transaction (specifically the Universal Requestor Transaction). The requisitioner shall identify the need for stock through planning or other established qualitative means. Descriptive information such as commodity codes, delivery date, and suggested vendors shall be captured as well. Moreover the RQ transactions requires the use of a valid warehouse, valid commodity code, and stock item suffix.

  • For more information regarding requisitions please reference CORE policy PR.PO.01 found in the procurement environment.

INV.PO.04.PR.02 Inventory Replenishment

• Based on the ABC Classification settings, current inventory level, and historical usages, the inventory module process calculates the recommended reported quantity and determines if a given commodity can be ordered from a pre-existing master agreement. These items are identified by the Inventory Replenishment Review process by identifying those items whose quantities are less than the reorder point; and then placing an entry on the Inventory Replenishment Table (IREP). If a commodity does exist on a master agreement, the reorder quantity will be refreshed.

• The Inventory replenishment process uses the IREP table to select records for processing. Based on the information in the IREP table, the Inventory replenishment process creates the required transactions. DO transactions are used if items are on a master agreement, and a RQS is used for items not on a master agreement.

INV.PO.04.PR.03 Receiver Transactions

• In the event that those quantities have been procured for a warehouse; departments shall use a receiver transaction to reconcile the quantities ordered vs. the quantities delivered. Both requisitioning transactions including the RQS, the Universal Requestor should follow the procedures found in the Procurement policy PR.PR.01.1 “Requisition” and, Pr.PR.02.1 “Universal Requestor”.

PR.PR.01.1 – Requisition – Standard Requisition Procedure(s)

Overview: Standard Requisitions will be used to initiate all purchases, with the following exceptions:

1. CDOT/Higher Ed requests will not be initiated by a Standard Requisition in CORE

2. Emergency Procurements

3. Goods and/or services are being purchased from a Price Agreement, Master Agreement or are a stocked inventory item.

RQS Transaction Creation

• Standard Requisitions are identified by Transaction Type RQ and Transaction Code RQS in the CORE system. In the CORE system, all Requisition identification numbers will be auto-generated. The auto-generated number will use the year as a prefix, then a number when to complete the remaining 5 digits (ex: 201300001).

PR.PR.01.1 – Universal Requestor – Universal Requestor Procedure(s)

Overview: Universal Requestors will be used to initiate all of the following types of purchases:

1. Goods and/or services being purchased from a Price Agreement.

2. Goods and/or services being purchased from a Master Agreement.

3. Goods and/or services are being purchased to become a stocked inventory item.

4. Goods and/or services are being purchased from a catalogue or punch out session.

UR Transaction Creation

• Universal Requestors are identified by Transaction Type RQ and Transaction Code UR in the CORE system. In the CORE system, all Universal Requestors identification numbers will be auto-generated. The auto-generated number will use the year as a prefix, then a number when to complete the remaining 5 digits (ex: 201300001).

The following information is required when creating a UR transaction:

• A Universal Requestor must have at least one line item. There can be one or more Commodity Lines within a single UR transaction. At least one Accounting Line has to be assigned to a Commodity Line. However multiple Accounting Lines can be associated with each Commodity Line.

The following are sections within a UR transaction:

Lastly, the receiver transaction and policies surrounding the use of this transaction can be found in the procurement policy PR.PO.06 “Post Award”:

Receiver Types & General Information:

1. RC Transaction Code is used to reference existing Award transactions;

2. RS (the Stand Alone Receiver) Transaction Code is used to record received items into the system and the Award is either not known or still in Draft or Pending Status. As soon as an Award has been fully processed, users will use the RS to match the received quantities and service contract amounts to specific Award commodity Lines on the MatchRS section. After the reference has been entered, the newly submitted RS transaction will create a RC transaction.

Procedure INV.PO.04.PR.04 Receiving Overage in Inventory

Overages can be received on the Receiving Transaction. It is the responsibility of the departments to set those limits within the scope of acceptable guidelines.

Procedure INV.PO.04.PR.05 Receiving Differences in POs and Invoices Received

Overages regarding those in the financial spectrum can be received on the Receiving Transaction. It is the responsibility of the departments to set those limits within the scope of acceptable guidelines.

Procedure INV.PO.04.PR.06 Adding Shipping Charges

As items are procured and subsequently purchased for inventory usage, vendors will apply shipping cost to said order. Procedures regarding how the cost of shipping is added onto a purchasing transaction are outlined in the procurement policy PR.PO.05.2 “Award”.

Freight:

Shipping/Freight costs will be included in the Solicitation transactions by requiring vendors to respond with freight included in the unit cost of the items. As a result the freight costs will be imbedded within the costs indicated on the Award transaction. In the case where Vendors late bill with the addition of shipping charges after the commodity has been shipped, it is the responsibility of the purchasing user to edit the purchasing transaction with the accurate shipping charges.