In this blog post we will understand how to configure purchase lead time in Odoo ERP software. Before we initiate with the complete understanding of flow and process lets understand what is Purchase Lead time or Purchase order lead time (POLT) refers to the number of days from when a company places an order for production inputs it needs, to when those items arrive at the manufacturing plant. Put simply, a POLT is the estimated time which it takes to receive an order after it’s placed.
Purchase management is another important module of any ERP system, Odoo Purchase management specifically design considering the ease of use to the user. Odoo purchase management module helps you to track all your supplier’s information, the order you did for purchases, Inventory management, pricing for suppliers, and so on . . Odoo Purchase management provides you with a complete end-to-end purchasing solution from RFQ to payments.
Odoo purchase management further helps you to have quick decision-making since all the purchase history and the supplier’s list are already available in the Odoo software. You can easily manage all your RFQ and purchase orders with Odoo. Your organization may be purchasing much variety of products and services either to meet the business or organizational day-to-day requirements, therefore purchases are considered as one of the important modules of any ERP software. Odoo Purchase management helps you to handle everything you purchase for your organization. Specifically, it is a backbone module for trading industries.
Another advantage of the purchase management module is that it is integrated with other related modules. This means when you are purchasing a product for your organizational needs you have to pay the pricing of the good you got, in other words Accounting entries are done automatically once the purchase is done so forth the payments. The module is also integrated with Inventory which updates as the products are entered into the warehouse.
Lead Time is the time interval between placed order and actual delivery or received an order. Lead time is directly related to either a purchase order or a production order which is issued to the company, manufacturing, or shop.
The Lead time is useful in such a kind of scenario If a supplier (an external firm or an internal department or plant) cannot supply the required goods on demand, then the client company has to keep the Products in Inventory always, as longer lead time then a large number of Products in the company warehouse inventory has to be in stock.
In Some of the Manufacturing vertical in the automobile just in time manufacturing company matters with a lead time and those have an extremely low level of Inventory or some of the companies take delivery of some goods as many as 10 times per day. For example, like to manufacture a Steel Mills, it may take a 4 month lead time. That is a user of the company for Steel Mill Product must place an order at least 4 months in advance to fulfill the requirements.
Purchase is the process of buying material or product from a vendor. As we are discussing purchase lead time in this blog post we can also bifurcate the customer lead time.
In Odoo we can control the Purchase and related operations, there is an adoptive option called Purchase lead time.
We can define the purchase lead time while PO (Purchase Order) is created and set the delivery time of the Buyer Product.
For customer satisfaction, we can consider a lead time a signified element even though a purchased lead-time is different from customer lead time or both are interlinked to each other. If a buyer is aware of the purchase lead time so he can set an accurate lead time. If any variation in the purchase lead time will affect the customer lead time directly. It can also cause customer dissatisfaction. The delay will also affect the supply chain.
Why is Purchase Lead time Management Important?
Purchase lead time is a key factor in managing all other operations related to the business. If we can calculate purchase order lead time efficiently, we will be able to plan to manufacture any product using the purchased material or the sale of the purchased product efficiently.
This operation can be explained here with the help of an example. Suppose we have placed an order for a customizable desk on April 2. The lead time, here, is 10 days. Then the product will be arriving in our inventory on April 12.
Once we can calculate this lead time, we can plan our manufacturing efficiency and manage the product delivery date to our customers more accurately. Suppose, a furniture manufacturing unit has placed an order on April 1 for wooden panels to manufacture shelves. The lead time he gets is 10 days. Then he can calculate the product manufacturing schedule, and location of his customer and find out the total number of days that will be required for product delivery. This will surely help us to ensure customer satisfaction as the customer will be getting the product within the promised date.
To make use of this feature we can Click on the purchase module of Odoo. As lead time is calculated based on the purchase order.
Step 1: We need to first create a request for quotation (RFQ).
Step 2: To create RFQ select menu Orders >> RFQ or Click to Create button
Step 3: Select the Vendor or we can create a new vendor by simply adding a new one. Now we have selected Azure Interior as the vendor and cabinet with doors as the product.
In the above screenshot, we can find options like Order Deadline and Receipt Date. Here, the Receipt date means the date on which the buyer is expected to receive the product. Now it is time to check the Product Tab.
Here, we have already selected a cabinet with Doors as the product. But we cannot find the delivery date option there. In order to add this, we can click on the three vertically arranged dots on the right-hand side.
Step 4: Here, we can find that UoM (Unit of Measure) and Taxes are enabled and Delivery Date and Analytic Account are disabled form the above step. We have to enable the Delivery date option to get this date under the product tab.
Now, we have enabled the option and we can find the delivery date option. The delivery date is generated automatically and the receipt date gets auto-added as a delivery date.
We have also set the unit of measure and unit price.
Here the Order deadline and receipt date are the same. When we consider the above-mentioned case we cannot find any lead time. To get lead time we have to make the necessary changes.
Step 5: As we may be familiar with the vendor and the delivery time required we can do this by clicking on the external link given next to the product name.
Once we click on the external link we will get the product window.
Step 6: Here, there are many tabs and what we have to choose is the Purchase Tab and set the delivery lead time given here is 0. We can edit this option and add 2 as the delivery lead time.
Step 7: Now we have to save the changes and return them to the RFQ.
But the fact is, automatic updating of lead time is not possible here. Instead, we will have to delete the product from the product tab and add the product again. We can find the Delivery date and receipt date updated.
In Odoo we have an easier option. Here we can click on the Receipt date directly and change the receipt date using the drop-down menu. We can change the receipt date to April 18 here. In the next line, we can see an option Ask Confirmation. This enables us to send a confirmation letter to the vendor within a few days.
Step 8: After all the above steps we can save the changes and Confirm the order. Once the order is confirmed the RFQ will be changed to Purchase order
Step 9: In the below image we can find that the RFQ has changed to a purchase order with Purchase Order Number. Then the wait begins for the arrival of the purchased item. Once the product has arrived we can click to Receive Product or on the Receipt button with the truck icon
Step 10: Validate the Product with the quantity and assign the warehouse located in the inventory
Setting up purchase lead time is a simple process. Once we set the Purchase Lead time, we can also set up customer lead time.
Why is Lead Time important in business?
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