Oracle Applications R12 Sourcing Training

Oracle Applications R12 Sourcing Training Dharma lingam Kandampalayam Shanmugam, OCP, PMP

Agenda Introduction Sourcing Flow & Overview Limitations Data Flow in Sourcing tables Q&A and Demo

Sourcing – What it is?
Oracle Sourcing is a complete and integrated global sourcing platform which allows buyers
Crate immediate and long term savings
To optimize the supply base
Reduce sourcing costs
Improve supplier relationships
and Source for the best value

Sourcing – Where it fits in P2P flow? Requisitions Purchase Orders Receiving Payment Supplier Performance Catalog Content Management Supplier Management Ordering Sourcing Analysis Negotiations & Awards

Sourcing At-a-Glance Identify Suppliers, Define Strategy Analyze and Award Conduct Negotiation Approve and Issue Define Negotiation Identify Opportunities Buying Professional Supply Base LOB Stakeholder Implement Agreement “ Strategic sourcing applications are providing the triggers for cultural change, higher productivity and -- above all -- return on investment.”

Sourcing Flow Source More of Your Spend Source for Lowest Total Cost Create Immediate and Long-Term Savings Structured Event Support Cross-Functional Collaboration Knowledge Capture / Re-use Total Cost Analysis* Real Time Decision Support* Enterprise Integration Rapid Deployment Change Management Automated Negotiations, Bid Mgmt and Award* Make Savings Stick Identify Opportunities & Suppliers Conduct On-Line Negotiations Analyze & Award Approve & Issue Define Strategies & Negotiations Purchasing Contract Mgmt Finance Marketing Other Operations Integration * Requires Sourcing Optimization

Sourcing Process Flow (Different View)

System Generated Recommendations* Eliminate Time-Consuming Manual Analysis Optimized, Policy-Compliant Award Recommendation
Multiple Sites
Dozens of Bid Lines
Company Policy Complex Bids Maximum of 5 Vendors Minimum 60% to incumbent supplier $100k Annual Maximum
Sourcing Rules
Budget Constraints
Supply Base Rules
Multiple Suppliers Model multiple business constraints and supplier inputs Award Optimization Engine * Requires Sourcing Optimization

3 business flows
There are 3 business flows that utilize sourcing i.e. there are 3 different ways negotiations can be created in Sourcing.
Demand Workbench feature in Purchasing to aggregate the demand from approved requisitions.
Blanket Purchase Agreements (BPA) which are about to expire can be the source to create new RFQ / Auction.
Buyers can define sourcing documents directly in sourcing.

Negotiation Documents – Types & Differences In Sourcing, the documents are called negotiations. There are 3 different types of negotiations: - RFI, RFQ, and Auction. # RFI RFQ Auction 1 Buyers can choose to define negotiation line items without price and quantity. This is especially useful, when trying to develop new suppliers for an item. RFQs enable buyers to request quotes from suppliers for complex and hard-to-define items or services such as make-to-order manufacturing items or construction projects. Auctions enable buyers to solicit bids for goods and services that are clearly defined, such as office furniture or memory chips. 2
Buyers can specify the lists of criteria to which suppliers must respond.
Example: An Organization is trying to acquire a Purchasing Application.
The level of product support a supplier can provide.
The specific platforms the product can run on.
RFQ consists of multiple rounds with competition focused on which supplier(s) can meet the specific requirements in addition to price. Auctions are typically focused on creating competition between sellers.

Negotiation Response Styles
There are 3 different ways response to different negotiation documents can be handled:
Open
In an open negotiation, all members participating in the negotiation can see the bids, though the bidder identity is concealed.
Open negotiations encourage competition among bidders to submit the best possible price.
Blind
In a Blind negotiations, only the creator of the negotiation can see the bids.
Sealed
In a sealed negotiation, the creator cannot see the bids until the negotiation is unlocked.
Participants in the negotiation cannot see the bids until the negotiation is unsealed.

Multi Attribute Weighted Scoring
Attributes are characteristics of the product – Example: phone book memory, battery talk time, standby time to cell phone.
These attributes can be at either header (requirements) or line level.
Oracle Sourcing provides the ability to assign weights and scores to an unlimited number of custom attributes.
Bids can be scored on any combination of price and buyer-defined criteria such as delivery dates, quality, vendor reliability and financial stability.

Multi Attribute Weighted Scoring Requirements Weight Value (Score) Quote 990 Response Score Are you ISO certified? 25% Yes (100) No (0) No 0 Number of years in business 35% > 14 (100) 10-14 (75) 5-10 (50) < 5 (0) 15 35 Number of shipping locations 40% > 19 (100) 11-19 (50) 1-10 (25) 35 40 Total Score calculated by Oracle Sourcing 75

Team Scoring of Requirements
Each Team Member scores each response
Each Team Member scores the assigned Section
Oracle Sourcing calculates average of individual score sheets to determine Section score
Sum of Team scores determines overall response score
Quality Control Team Technical Team Technical Capabilities (40% weight) Commercial Team Price (40% weight) Past Performance (20% weight) Quote 988
John = 90
Mary = 85
Sue = 80
Sue = 75
Doug = 80
Tina = 85
Alan = 90
Mark = 80
Technical Capabilities = 34 Price = 32 Past Performance = 17 TOTAL SCORE FOR QUOTE: 83

Setup Details
Oracle Sourcing makes use of setup and reference data stored and maintained by the following modules:
Oracle Payables
Oracle Purchasing
Oracle General Ledger
Oracle HRMS
Oracle Inventory
Oracle System Administration
Oracle Workflow
Portions of the above applications must be implemented for Oracle Sourcing to work.

Setup Details – Profile Options
PO: Allow Auto creation of Oracle Sourcing Documents - Enables buyers to use Auto Create to generate draft auctions and Sourcing RFQs that can then be completed and awarded in Oracle Sourcing .
Sourcing Default Responsibility for External User - Specifies the responsibility assigned to external user.
PON: Automatically Default Catalog Attributes - Determines the type of catalog attribute to add to negotiation, while selecting a shopping category (all, base, category, none).
PON: Enable Sourcing Award Approval - Before creating a PO, award can be subjected to approval using AME.
POS: External URL - To construct the link to the supplier registration page & abstract page.
POS: Enable Award Optimization - To specify multiple award criteria & have the system compute the award.

Abstracts & Forms
Abstract is a summary or synopsis of a negotiation used to advertise the purchase to increase competition. They would be presented in the buying org’s external website.
Form is a XML based file that can be transferred to 3rd party system.
For more details, pl refer the white papers referred in the reference section and ‘Sourcing Implementation and Administration Guide’.

Limitations
Not possible to update existing Purchase Orders on award completion (only new PO creation is possible).
Spreadsheet interface – Export just dumps data from the tables. Item import for negotiation lines require certain intelligence from the buyers!
There is no API to create Sourcing negotiations from external systems or through custom extensions (Enhancement Request 7614763 with Oracle product development)

Technical Info - Data Flow in Tables

References
White paper ‘Publish Business Opportunities to FedBizOpps from Oracle Sourcing’ ( Metalink Note: 375088.1 ) .
Oracle the Procurement News Letter Current Edition (search for the metalink doc ID: 111111.1)
White paper ‘Abstract and Forms in Oracle Sourcing’ ( Metalink Note: 329714.1 )
Oracle Sourcing Product Documentation for 11i (Metalink Note 208931.1 )

Thank You… A Q &

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Oracle Applications R12 Sourcing Training

by Dharmalingam Kandampalayam Shanmugam

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