5 Purchasing Overview.ppt

2. Copyright © 2004, Oracle. All rights reserved. Objectives After completing this module, you should be able to do the following: • Describe the process flow of Oracle Purchasing • Identify the implementation considerations of Oracle Purchasing

3. Copyright © 2004, Oracle. All rights reserved. Agenda • Purchasing Process • Purchasing Integration • Procurement Integration • Purchase Requisitions • Request for Quotations (RFQ) • Sourcing Rules • Purchase Orders • Receiving • Setup • Oracle Advanced Pricing Integration

5. Copyright © 2004, Oracle. All rights reserved. Purchasing Integration Oracle Cash Management Oracle Project Accounting Oracle CBC Oracle Alert Oracle Workflow Oracle Payables Oracle General Ledger Oracle Human Resources Oracle Assets Oracle Cost Management Oracle Purchasing

6. Copyright © 2004, Oracle. All rights reserved. Procurement Integration Oracle Procurement Contracts Oracle Quality Oracle Project Manufacturing Oracle ASCP/MRP Oracle Work in Process Oracle Consigned/Vendor Managed Inventory Oracle iSupplier Portal Oracle Sourcing Oracle Inventory Oracle Order Management Oracle e-Commerce Gateway Oracle XML Gateway Oracle Purchasing Oracle Services Procurement Oracle iProcurement

7. Copyright © 2004, Oracle. All rights reserved. Procurement Integration (continued) Oracle Procurement Contracts Oracle Quality Oracle Project Manufacturing Oracle ASCP/MRP Oracle Work in Process Oracle Consigned/Vendor Managed Inventory Oracle iSupplier Portal Oracle Sourcing Oracle Inventory Oracle Order Management Oracle e-Commerce Gateway Oracle XML Gateway Oracle Purchasing Oracle Services Procurement Oracle iProcurement

8. Copyright © 2004, Oracle. All rights reserved. Procurement Integration: Central Procurement Centrally source demand from multiple operating units Channel spend through appropriate legal entity based on the location of the supplier and the destination Automatic settlement of funds between the purchasing organization and the consuming organization

9. Copyright © 2004, Oracle. All rights reserved. SOB1/OU1 SOB2/OU2 Procurement Integration: Central Procurement (continued) Physical Flow SOB – Set Of Books Transaction Flow OU – Operating Unit Legend Factory Shared Procurement Service Center Global Supplier

10. Copyright © 2004, Oracle. All rights reserved. Purchase Requisitions Ensure that the appropriate management approval is given before purchase orders are created Decentralize your purchasing department by having requesters Source your requisition with the best suppliers and at the lowest cost

11. Copyright © 2004, Oracle. All rights reserved. Inventory WIP ASCP/MRP Demand Requisition Requisition pool Order entry Import/reschedule requisitions Supplier Internal sales order Manually create Approval Order Mgmt Purchase Requisitions (continued)

12. Copyright © 2004, Oracle. All rights reserved. Purchase Requisitions (continued) Through Oracle Purchasing, you can: Create, edit and review requisitions online Review requisition status and action history Automatically source requisitions from open purchase agreements and quotations Utilize requisition templates for items you purchase frequently Create internally and externally fulfilled requisitions Distribute expenses across multiple cost centers

13. Copyright © 2004, Oracle. All rights reserved. Purchase Requisitions: Information Flow Oracle MRP Oracle Inventory Oracle WIP Purchase Orders Oracle Order Mgmt Purchase Requisition Process Suppliers Requirements Subinventory Replenishment Outside Processing Drop Shipments

14. Copyright © 2004, Oracle. All rights reserved. Purchase Requisitions: Document Access Levels Requisition Quotation Purchase Order View Only Modify Full Action Change Change View View View Cancel or Final Close

15. Copyright © 2004, Oracle. All rights reserved. Purchase Requisitions: Security, Approval Limits, and Approval Routing Options Security by document type and action Employee-to- supervisor routing or Hierarchy routing Document security and approval Approvals by position or job and then: • Document type • Document total • Charge account number range • Items, categories, locations

16. Copyright © 2004, Oracle. All rights reserved. Enter RFQ Suppliers from supplier list Supplier 1 Supplier 2 Supplier 3 Request for Quotation • Header information – Doc. type, ship-to, bill-to – Quote effective date • Line information – Quantity – Unit of measure – Target price • Min/max quantities • Terms and conditions • Hazardous materials • Multiple shipment quotations Request for Quotation

17. Copyright © 2004, Oracle. All rights reserved. Supplier B 40 % Rank 1 Supplier A 60 % Rank 1 Effective: 01-JAN-97–31-DEC-03 Supplier A 100 % Rank 1 Effective: 01-JAN-04 Supplier C 100 % Rank 2 Supplier C 100 % Rank 2 Sourcing Rules

18. Copyright © 2004, Oracle. All rights reserved. Purchase Orders: Process Receive against PO Match invoices against PO Maintain documents Accept Revise Control Approve PO AutoCreate Manually create Requisition pool

19. Copyright © 2004, Oracle. All rights reserved. Purchase Orders: Process Inputs and Outputs Key Outputs • Fulfilled order • Purchase order • Blanket order release Key Inputs • Internal demand • External demand • Requisition • Supplier catalog • Engineering specifications • Customer specifications Overall Ordering Process

20. Copyright © 2004, Oracle. All rights reserved. Purchase Orders: Origin Oracle WIP Other systems Demand Manually create Import/reschedule requisitions Create internal sales order Requester Order Management Create supplier purchase order Oracle Inventory Oracle MRP Source? Approve

23. Copyright © 2004, Oracle. All rights reserved. Purchase Orders: Management Interfaces (continued) Receiving Open Interface Requisition Import Purchase order releases Purchasing Documents Open Interface

24. Copyright © 2004, Oracle. All rights reserved. Purchase Orders: Purchasing e-Commerce Capabilities • Order import enhancements: • Error correction forms • Import of returns • Price and payment terms validation • EDI transactions outbound: • Purchase Order (850/ORDERS) • Purchase Order Change (860/ORDCHG) • EDI transactions inbound: • Price/Sales Catalogue (832/PRICAT) • Response to Request for Quotation (843/QUOTES)

25. Copyright © 2004, Oracle. All rights reserved. Purchase Orders: Purchasing XML Capabilities Purchase orders can be sent to a supplier using the following XML transactions: • Purchase Order (PROCESS_PO_007) • Release against Blanket PO (PROCESS_PO_007) • Purchase Order Change (CHANGE_PO_006)

26. Copyright © 2004, Oracle. All rights reserved. Purchase Orders: Creation You select the appropriate purchase order document type for your needs Standard purchase order Contract purchase order Blanket purchase agreement Planned purchase order

27. Copyright © 2004, Oracle. All rights reserved. Purchase Orders: Maintenance • Maintain purchasing documents – Print purchase orders – Archive purchase orders – Modify purchase orders – Copy purchase orders – Enter and view purchase order acceptances • When you change a purchase order, Purchasing automatically increments the revision and in many cases requires document re-approval • You can modify the purchase order status (cancel, close, hold, delete, and so on)

33. Copyright © 2004, Oracle. All rights reserved. Receiving in Oracle Purchasing • Receiving is a transaction that signals that the goods ordered on a purchase order have arrived. • Oracle Purchasing has the following methods of receiving: – Standard receipt – Direct receipt – Inspection required

34. Copyright © 2004, Oracle. All rights reserved. Receiving: Open Interface Enhancements  Support for majority of receiving transactions  Multi-stage transaction processing  Receiving transactions against customer RMAs, internal order, and inter-org transfers  Lot/serial number details on all receiving transactions  Use of License Plate Numbers (LPN) to group items and transact on the group as a whole

35. Copyright © 2004, Oracle. All rights reserved. Receiving: Drop Ship Process Enhancements • Improved purchase order communication • Automatic document synchronization o Automatic flow down of customer requested changes from Sales Order to Purchasing documents o Examples: Order cancellation, quantity increase, date changes • Automatic acceptance of Advanced Shipment Notices (ASN) against drop shipments Streamlined integrated business flow between Order Management and POs for Drop Shipments results to:

36. Copyright © 2004, Oracle. All rights reserved. Setup: Required Setup Steps for Oracle Purchasing • Set Up Approval Information • Define Lookups • Define Purchasing Options • Define Buyers • Define Line Types • Purchasing Database Administration • Define Financial Options

37. Copyright © 2004, Oracle. All rights reserved. Setup: Purchasing Accounting Considerations • Purchasing transactions that create journal entries • Transfer of purchasing journal entries to General Ledger • Controlling transaction accounting periods • Using multiple currencies • Foreign currency journal entries Using foreign currency Journal entries Purchase Order

38. Copyright © 2004, Oracle. All rights reserved. Setup: Purchasing Period-End Accrual Cycle • Receiving transactions • Invoices matched and entered • Accounts payable period closed 1. Run Receipt Accrual- Period End Process 2. Run Oracle General Ledger Journal Import Process 3. Run Accrual Rebuild Reconciliation Report Analyze and write-off discrepancies Close the purchasing period

39. Copyright © 2004, Oracle. All rights reserved. Setup: Accounting Implementation Considerations • Interface processing – How often will your general ledger and Oracle Purchasing interface? – How will currency exchange rates be updated? • Integration issues – What requirements of the Purchasing, Treasury, and Finance departments must be considered?

40. Copyright © 2004, Oracle. All rights reserved. Setup: Inventory Setup Requirements • Defining inventory organizations • Defining locations • Units of measure • Item setup • Item attribute controls • Defining item attributes • Status codes

41. Copyright © 2004, Oracle. All rights reserved. Setup: Inventory Implementation Considerations • Numbering conventions • Item conversion • Data mapping • Data cleanup • Item maintenance • Integration issues

42. Copyright © 2004, Oracle. All rights reserved. Setup: Purchasing Options • Default options • Accrual options • Control options • Internal requisition options • Numbering options • Tax defaults options

44. Copyright © 2004, Oracle. All rights reserved. Setup: Requisition Implementation Considerations • Requisition sources • Requisition usage • Requisition conversion • Data mapping • Interface processing • Integration issues

45. Copyright © 2004, Oracle. All rights reserved. Setup: Purchase Order Implementation Considerations • Use of purchase orders • Conversion of purchase orders • Data mapping • Data cleanup • Integration issues

46. Copyright © 2004, Oracle. All rights reserved. Setup: Receiving Implementation Considerations • Advanced shipment notices (ASN) • Payment on receipt • Lot and serial number tracking • RMAs • Receipt conversion • Interface processing • Integration issues

47. Copyright © 2004, Oracle. All rights reserved. Oracle Advanced Pricing Integration Oracle Advanced Pricing is a flexible rules- based pricing engine Use price lists, pricing formulas and price modifiers in Oracle Advanced Pricing to price requisitions and purchase orders Purchasing professionals can now define complex pricing structures in Oracle Advanced Pricing

48. Copyright © 2004, Oracle. All rights reserved. Summary In this module, you should have learned how to: • Describe the process flow of Oracle Purchasing • Identify the implementation considerations of Oracle Purchasing

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