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Unit of Measure Processing
Unit of Measure Processing
Units of measure are used to express quantity. The Purchasing system allows a part to have up to three units of measure associated with it:
· Stockkeeping unit (SKU). The unit of measure used for stocking the part.
· Purchasing unit (PU). The unit of measure in which the purchase order is written.
· Quotation pricing unit (QPU). The unit of measure used for quotations pricing.
The stockkeeping and purchasing units of measure are defined on the Part Master File for each part. The quotation pricing unit is defined on the Quotation Master File. They can be modified within a purchasing entity by specifying the related conversion factors to the stockkeeping unit of measure.
Use
Throughout the Purchasing application, various units of measure must be used in the different conversations. The table below explains how the different conversations process units of measure.
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Unit of Measure Processing
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Part Master Maintenance
(Design Engineering Application)
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This conversation defines the part's stockkeeping unit of measure (SKU) and default purchasing unit of measure (PU).
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Item/Vendor Relationship Maintenance
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This conversation defines the purchasing unit of measure (PU) for an item/vendor relationship. The default value is the PU on the Part Master File for the part; this value may be overridden.
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Quotation Maintenance
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This conversation defines the quotation pricing unit of measure (QPU) for an item/vendor relationship. The default value is the PU from the item/vendor relationship record; this value may be overridden.
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Requisition Maintenance
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Only the Stockkeeping unit of measure, as defined on the Part Master File for the part, may be used in this conversation.
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Purchase Order Maintenance
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In a purchase order line, the unit of measure is the PU from the item/vendor relationship, if one exists; else, it is the PU from the Part Master File for the part. This purchase order line unit of measure cannot be modified.
In a purchase order line using a quotation, the conversion from the QPU to the PU to determine the price corresponding to the purchased quantity is automatically performed by the system.
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All receipt conversations
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For receipt entry, two units of measure may be used: the PU from the purchase order line or the SKU. On the Receipt Function Select screens, an option will be displayed to indicate whether the receipt detail quantities will be initially defaulted in the PU or in the SKU. On the Receipt Detail and Recap screens, a command key (F21) will allow you to toggle between displaying quantities in PU or in SKU allowing you the option to enter or view them in both. In the Receipt Inquiry conversation, you will also have the option of displaying receipt line quantities in PU or SKU.
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Units of Measure
In addition, two conversion factors must be defined. The next table explains these conversion factors.
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Conversation Where Defined
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PU/SKU
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Define the number of purchasing units per stockkeeping units.
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Part Master Maintenance (default)
Item/Vendor Relationship
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QPU/SKU
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Defines the number of quotation price units per stockkeeping units
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Quotation Maintenance
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Unit of Measure Conversion Factors
Considerations
These multiple units of measure are used to make the buyers' and analysts' tasks easier; each uses the units of measure they are most comfortable with. The system easily converts from one unit to another by using the conversion factors. Therefore, care must be taken to accurately enter the conversion factors; otherwise, conversion errors can multiply and cause unexpected results.
The conversion factors are in two parts: A numerator and a denominator. This conversion factor is multiplied by the quantity in the original unit of measure to arrive at the new unit of measure.
For example, suppose a company purchases a part that it stocks singly but purchases in boxes of four:
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Stockkeeping unit of measure (SKU)
Purchasing unit of measure (PU)
Conversion factor: numerator
denominator
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= EA (each)
= BX (box)
= 4
= 1 (4 each per 1 box)
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Notice that the conversion factor is expressed as the number of stockkeeping units per the corresponding number of purchasing units, in this case 4 each per 1 box. Thus, the number of purchasing units may be multiplied by the conversion factor to arrive at the number of stockkeeping units. Suppose the company buys 50 boxes of the part:
50 PU times 4 (conversion factor) = 200 SKU
Similarly, to decide how many purchasing units must be ordered to satisfy a requisition expressed in stockkeeping units, the number of stockkeeping units is divided by the conversion factor to arrive at the number of purchasing units. Suppose the company needs 130 (SKU) of the part. To determine how many boxes (PU) should be ordered:
130 SKU divided by 4 (conversion factor) = 32.5 PU
Since the vendor probably doesn't sell half boxes, the company will order 33 boxes, for a total SKU of 132.