Oracle Purchasing Overview and Process

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Purchasing Overview
Financial Applications Overview

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

Agenda
• Purchasing Process
• Purchasing Integration
• Procurement Integration
• Purchase Requisitions
• Request for Quotations (RFQ)
• Sourcing Rules
• Purchase Orders
• Receiving
• Setup
• Oracle Advanced Pricing Integration

Purchasing Process
Create
requisition
AutoCreate
Purchasing
document
Send to
supplier
Receive
goods
Approve
requisition
Approve
document

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

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

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

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

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

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

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)

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

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

Purchase Requisitions: Document
Access Levels
Requisition
Quotation Purchase
Order
View Only
Modify
Full
Action
Change
Change
View
View
View
Cancel or Final Close

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

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

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

Purchase Orders: Process
Receive
against PO
Match invoices
against PO
Maintain documents
Accept Revise Control
Approve
PO
AutoCreate Manually
create
Requisition
pool

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

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

Purchase Orders: Information Flow
Oracle MRP
Oracle Inventory
Oracle WIP
Purchase
Orders
External systems
Purchase
Order
Process
Suppliers

Purchase Orders: Management Interfaces
Receiving
Open
Interface
Requisition
Import
Purchase
order
releases
Purchasing
Documents Open
Interface

Purchase Orders: Management Interfaces
(continued)
Receiving
Open
Interface
Requisition
Import
Purchase
order
releases
Purchasing
Documents Open
Interface

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)

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)

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

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)

Purchase Orders: Printing and Communication

Receiving: Process
Shipment of
goods
Inspection
Deliver
Inventory
Shop floor
Expense
Receipt

Receiving: Process (continued)
Shipment of
goods
Inspection
Deliver
Inventory
Shop floor
Expense
Receipt

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

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

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:

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

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

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

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?

Setup: Inventory Setup Requirements
• Defining inventory
organizations
• Defining locations
• Units of measure
• Item setup
• Item attribute controls
• Defining item attributes
• Status codes

Setup: Inventory Implementation
Considerations
• Numbering
conventions
• Item conversion
• Data mapping
• Data cleanup
• Item maintenance

Setup: Purchasing Options
• Default options
• Accrual options
• Control options
• Internal requisition options
• Numbering options
• Tax defaults options

Setup: Financial Options
Accounting
Supplier -
Purchasing
Tax defaults
in Tax region
Other tabs

Setup: Requisition Implementation
Considerations
• Requisition sources
• Requisition usage
• Requisition conversion
• Data mapping

Setup: Purchase Order Implementation
Considerations
• Use of purchase orders
• Conversion of purchase orders
• Data mapping
• Data cleanup

Setup: Receiving Implementation
Considerations
• Advanced shipment notices (ASN)
• Payment on receipt
• Lot and serial number tracking
• RMAs
• Receipt conversion

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

Summary
In this module, you should have learned how to:
• Describe the process flow of Oracle Purchasing
• Identify the implementation considerations of
Oracle Purchasing

Oracle Purchasing Overview and Process

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