Commodity Contract Management – Getting the Most Out of Supplier and Contract Management (Part 1 of 2: Grower Accounting)

By - March 22, 2013

RSM’ Commodity Contract Management (CCM) system is designed to enhance and manage the relationship between a company and its suppliers with the acquisition of products that are variable in nature. In essence, it results in the creation of closer and more collaborative relationships with key suppliers.  

Variable products cannot be described by just an item number as they usually require additional information such as multiple units of measure or attribute information. Payment for these types of products may also be based on a number of factors such as units of measure and attribute information. Some examples of these products are fruits, vegetables, grains, nuts, raw or frozen meats, and seafood.

The acquisition of these products cannot be handled through normal purchase orders and supplier schedules. It requires a more complex system to manage the definition of contractual relationships, purchase methods, payment and pricing rules, delivery planning and scheduling, receipt process, quality review, and crop or harvest activities.

RSM’ functionality makes it easy to maintain the following:

  • Contract Management – This feature allows definition of rules for purchasing and paying for products.
  • Delivery schedules – This allows for monitoring and tracking of vendor/growers’ adherence to an agreed upon delivery schedule.
  • Delivery Planning and Authorization – This function provides a workbench to aid in the planning and management of deliveries.
  • Receipt and Quality Process – Defining control and validating the receipt of product based on contract and quality rules.  This also provides the ability to adjust the price based on the quality of the received product.
  • Third-party payments – Allows for payments to be automatically generated to the third-parties associated with the purchasing and receiving process.
  • Settlement process – Receiving payments for product received based on the rules of the contract.
  • Commodity cost and variance management – Monitoring, tracking and adjusting cost variances to finished goods, COGS, and profit.
  • Milk product receiving – Included in the final settlement against invoicing.
  • Receipt modification after processing – There is an easy function of correcting receipts regardless of their status in the system.  This allows for modifications even after the product has been consumed and invoiced.
  • Driver check-in sheet – Provides for entry of additional driver information on the picking list form.

Grower Accounting

Commodity Contract Management, related specifically to Grower Accounting, encompasses the complete process of handling and selling of product for outside growers.  This results in a settlement to pay the growers the proceeds from the sales of their product less applicable costs, fees, and advances.

The Grower Accounting enhancement provided by RSM utilizing the functionality of Dynamic AX, results in accurate product identification from receiving through sale, and is tightly integrated with Procurement, Production, Inventory, Quality, Sales, Invoicing, and Payables.

Key Benefits:

  • Flexible contract setup and management.
  • Ability to specify Advances, Deductions, Expenses, and Premiums related to either the Contract or receipt line.
  • Easy to use Settlement form allows for consolidated payment.
  • Ability to pay third party vendors and have payments automatically link back to the contract and/or receipt line.
  • Full visibility reporting and reconciliation of the contract(s).

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