Supplier Management using Tally Prime

Supplier Management involves activities related to Purchase of Materials & Services, like Pre Order, Purchase Order, Goods Receipt, Vendor Payment & tracking activities. These may be broadly classified into following stages:

Purchase Activities Stages

• Pre Order : Defining the Items to be purchased : Indents, Enquiries
• Supplier selection : Price Comparison, Vendor evaluation.
• Order :Issue of Orders to suppliers, tracking of timely supply.
• Materials Receipt : Receiving and inspection of materials, as per order and quality. Issue of Receipt Notes. Resolution of disputes regarding supply
• Purchase Accounting : Recording of suppliers Invoice for payment
• Vendor Payment : Timely payment of suppliers Bill as per terms. Resolution of disputes regarding payment to supplier.

Queries & Reports of Purchase Management

• Query Dash Board: Dashboard for quick queries to get status of Item, Supplier, in respect of Indent, Order, Materials Receipt, Inspection, Invoice, payment.
• Reports : Detailed and summarised Reports of  Indent, Order, Materials Receipt, Inspection, Invoice, payment. Analytical reports as per Supplier, Item etc. Status Report of pending Indent, Order, Materials Receipt, Inspection, Invoice, payment, as per Vendor / Item.

Purchase Management

Supplier management involves maintaining efficient control on Purchases and Suppliers, to ensure consistent and reliable delivery of goods and services.

An effective supplier evaluation and management process can help organizations reduce costs, improve efficiency, and ensure the quality of the products and services they receive.

Supplier evaluation system covers the following basic features :

• Supplier evaluation is the process of evaluating and selecting potential suppliers
• Suppliers are often evaluated based on price, quality, delivery times, and overall performance.
• Regularly review and assessment of performance of suppliers

Data base of Suppliers of Products and Services

Create a data base of prospective suppliers, available / collected from various reliable sources of contact details, Important info about the products and services, so that right vendor may be selected

The data base should allow be filtered query based on Product / services, location and other Important criterion.

Supplier Price Comparison

For selection of supplier for purchase of any Item, the most Important factor is Price. Apart from best price, the buyer will also evaluate past performance and credential of the supplier

Suppliers submit Price List / Quotation offers for Basic Price and additional charges like Tax, Freight, Handling Charges and other charges, in their own way.

The Comparative chart shows the Price converted on all charges, discounts etc, on some unform parameters, for comparison. This will help the buyer to select best supplier.

Indents and Purchase Inquiry

For efficient Inventory control, Organisation normally decide the Stock Items in 2 ways :

• Stock Control Items : For regular consuming Items like Prime Raw Materials (for producers) or Regular Selling Items (for Traders), organisation normally fix minimum, maximum and average stock levels, minimum, maximum and economic ordering quantity etc. Purchase orders for such Stock Control Items are issued based on these parameters. Such system normally provides automated alert system and exception report to filter stocks, for actions, at appropriate time.

As soon as the current stock level of the in Stock Control Item reaches the re-order level, such Purchase Inquiry is sent to the regular supplier of that item.

• Non Stock Control Items :  Purchases for Items with irregular consumption / sale Items (like specific machine spare parts, customised Items etc) are made on demand. Normally, Inventory is not carried for such Items (or very low Inventory carried which is replenished on consumption). Purchase Indents are issued by consuming departments. The Purchase department may issue Enquiries to prospective supplier to submit their quotation. On evaluation of the Quotation, as explained, Purchase Orders issued to selected Supplier.

Purchase Orders & Materials Receipt Management

Purchase Orders Management system involves evaluation and selection of Vendors for each type of Stock Items, Purchase Order issue, Purchase Order Amendment, Goods Receipts, Inspection of Materials, Goods Rejection, etc, for materials received  against Purchase Orders.

Accounts Payables Management

Accounts payable management is a system deals with a business’s debts to vendors for Items bought on Credit.

Managing accounts and staying updated on payments and outstanding debts, to control its cash flow and regulate finances.

Accounts payable management helps clients pay their vendors within a reasonable time frame to maintain their trust and confidence. This may ensure that suppliers deliver products on time, communicate about delays, offer steady payment plans and continue working with the organization. Some suppliers offer discounts for early payments, and a company that pays its debts on time might take advantage of that.

Through efficient  Accounts payable management, company develops a payment plan as per cash budget, negotiate a payment plan with suppliers to prioritize other costs.

After receipt of materials, Purchase Invoice (i.e details of supplier’s Invoice) data are recorded.

Sometimes dispute may arise regarding supply, e.g Quantity (shortage / excess), Quality, Rate, Taxation etc. These are resolved and necessary Debit / Credit Note are issued for proper accounting.

Accounts Payable System covers recording of Purchase Invoice, Debit Credit Notes in respect of Purchases, Payment to suppliers.

A computerised Accounts Payable system should be able to automate all the linked process, like schedule payments as per due date, with option to manual override, do the payments and send payment advices to vendor, update vendor accounts, send advices. Such system may club together several payments due to a supplier, to simplify the payments tasks

This ensures that the company pays suppliers and vendors on time, earn on-time payment discounts for   and that you accurately remember payments. It may even earn the early or on-time payment discounts that many vendors offer.

Purchase Management Features and limitations in Tally PRIME

As explained, Purchase Management system covers several activities other than Purchase Accounting.

Tally PRIME is merely an accounting system, to record business transactions.

Purchase Order activities : In Tally PRIME, the Purchase system starts from Purchase Order. So, Tally PRIME does not cover pre purchase activities, like Indents & Enquiry, Price comparison, Vendor Evaluation, etc.

Tally does not provide features about exploring for prospective suppliers, compile offers of multiple suppliers, evaluate the suppliers offers and select the best supplier

However, some rudimentary process of Purchase Indents / Enquiry may be indirectly achieved through tactical use of Provisional Purchase Orders and subsequent regularisation. This is not documented, but some smart business organisations have adopted some innovative ways covering Indents / Purchase Enquiries, resulting better Purchase Control.

Tally provides elaborate and comprehensive features for recording and printing of Purchase Orders, updating Outstanding order Balances against receipt of materials, Tracking pending & overdue purchase orders in respect of Item, Supplier, follow up reminders for Due & Overdue Outstanding Orders, Summary & Age Analysis of Outstanding Orders.

Materials Receipt Activities : On receipt and acceptance of materials, as per Purchase Order, Materials Receipts note issued and Inventory is updated.

Tally provides elaborate and comprehensive system for recording of Accepted Materials Receipt. It also provides for recording of materials and post rejection of materials.

Tally does not provide for features for recording and tracking in-between activities like, Inspection, Acceptance, Rejection. So, such activities are recorded and tracked through Manual Process. The materials receipt Voucher is issued only on materials taken into stores. The open orders are updated on Receipt of Materials.

So, there is no in-bult system for rejection of materials at inspection stage. The rejection Note in Tally delas with return of materials returned from stores.

However, some rudimentary process of Materials Inspection Note may be indirectly achieved through tactical use of Provisional Goods Receipt Note on receipt of materials and subsequently regularising on materials inspection. This is not documented, but some smart business organisations have adopted some innovative ways for Materials Inspection activities, an Important stage for efficient Purchase Control.

Purchase Accounting Activities :

After receipt of materials, Purchase Invoice (i.e details of supplier’s Invoice) data are recorded.

Sometimes dispute may arise regarding supply, e.g Quantity (shortage / excess), Quality, Rate, Taxation etc. These are resolved and necessary Debit / Credit Note are recorded for proper accounting.

After recording the Purchase Invoice, payment to Vendors are made against the Purchase Invoices, An intimation is sent to vendor for information.

Full settlement of Purchase Invoice ends the Purchase Activities cycle.

Tally provides comprehensive elaborate System for recording of Purchase Invoice, Debit & Credit note in respect of Purchase, Payment of Purchase Invoice, updating supplier Ledger Balances, tracking of Outstanding Bills, Age Analysis summary for Suppliers, and follow up reminders.