By: John Smith – Director, Enterprise Business Solutions (CRGroup)
Many of our Government-affiliated clients have expressed interest over the last few years in improving their procurement process. Certainly the advances in Microsoft Dynamics® GP have helped a great deal, including the robust, effective and detailed workflow functionality introduced in GP 2013 and improved in versions since then. This has helped automate the approvals on purchase requisitions and purchase orders. Together with other improvements such as document attach, we have an effective way to capture and manage important documents.
There remains one consistent feature request I keep hearing that is related to Procurement Contracts. This led me to thinking about how we could design a solution to meet these needs. When I started really considering options, I realized that since so much functionality is already available in Dynamics GP that it might better to look at other options.
Before we get to the solution let’s review the high-level needs. By no means is this meant to be all of them, this is just the high level common needs that have been conveyed to me.
Top 5 Requirements for an Effective Procurement Contract Tracking System:
- Ability to create a procurement contract document in the system. It would define and track core master data such as the Vendor, Contract Start and End date, Contract Value and Version/Amendments
- Provide the capability to attach relevant documents, such as the actual signed contract or any amendments made there after
- Must be able to link the purchase contract to Purchase Requisitions, PO’s and ultimately Vendor Invoices
- The functionality should provide a capability to stop a purchase or warn the user if a purchase will exceed the contract value
- Reporting is key: must be able to report on all purchases contracts by Vendor; Contracts over a certain dollar threshold, Actual expenses versus Contract Value etc. Variations of this have now become a regular reporting requirement in the Federal Government space.
The approach I am recommending to accomplish these objectives is to use Analytical Accounting with Grant Management to set up and track Procurement Contracts.
As you know Analytical Accounting will allow us to create an alpha numeric dimension. This means we can easily set up a dimension called Procurement Contract and populate the existing contracts as codes within the dimension. Then of course we can set up an account group where this dimension is considered required for the various expenses accounts that will ultimately be charged with the purchases.
Now we add Grant Management to the mix. As you likely know, Grant Management is an extension of Analytical Accounting. It is built on the Analytical Accounting framework. Grant Management simply adds a piece of control logic that is not available in the existing AA functionality. This logic is the ability to assign and enforce budget dollar maximums at a Grant level. This works by creating an associated budget in Analytical Accounting and then setting warning thresholds by grant, as indicated in the screen shot below. The idea here is that the Contract Value is entered in the AA budget. This allow the contract value to become the control point for warning thresholds.
In this scenario, the “Grant” concept can simply be replaced by a “Contract” concept and can be renamed accordingly inside the software using Modifier. This means the Grant would actually become the Procurement Contract master record.
Using Analytical Accounting and Grant Management:
The following process highlights the important aspects of this configuration.
1. Set-up of Analytical Accounting with Grant Management (for Procurement Contracts)
2. For Procurement Contracts, set warning thresholds.
3. Entering Transactions and tagging them to Projects and Contracts.
With this set up in place, we can use all existing functionality including Purchase Requisition, Purchase Order and workflow. We can attach all related procurement contract records and documents to the master record. We will be warned when a purchase is about to exceed the Contract value (held in the associated AA budget). We will be warned when a purchase is about to exceed the budget. To handle the reporting requirements, we can use Smartlist Designer to create some simple Smartlists that will expose the Purchase Contract master data and meet all the associated reporting and monitoring needs. The best part is that it’s simple and easy to set up!
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About the Author:
John Smith is the Director, Enterprise Business Solutions at CRGroup and leads the ERP and CRG emPerform business units. In the area of ERP John has deep experience in chart of accounts design, core financials, inventory, procurement, project accounting, revenue recognition, distribution, financial planning, FX and CTA, management reporting and analysis. He can speak authoritatively and with up-to-date knowledge about ERP implementation, business intelligence and reporting solutions, business process improvement, and large scale business system transformation projects.
John is a Certified Professional Accountant (CPA,CMA) and holds a Bachelor of Commerce (Honors). He is also certified in various Microsoft Technologies including the Microsoft SureStep™ Project Management methodology.