The document provides an overview of setting up and using Oracle Purchasing. It discusses key steps like defining organizational structures and flexfields, setting up suppliers, defining purchasing options and document types. It also describes the purchasing cycle from requisitions to purchase orders to receipts and payments. Key features of requisitions, RFQs, quotations, purchase agreements and purchase order types are summarized.

1. Purchasing Training Oracle Applications 11i.5.10 Dharmalingam K S

3. Overview of Oracle Purchasing

5. Interface with other modules

9. Key Purchasing Dependencies Oracle Human Resources Oracle Purchasing Oracle Payables Oracle General Ledger Oracle Inventory

12. Purchasing Cycle Requisition Purchase Dept. Supplier Requestor Inventory Catalog Request for Quotation Quotation Purchase Order

13. Process Flow Oracle Purchasing Oracle Inventory Oracle Payables Requisition Purchase Order Raise a Receipt Inspection Deliver Goods Record Invoices Received Approve Invoices Pay Invoices Reconcile Payments Update Account Balances Place Orders Receive Goods Manage the Payables Process Encumbrance (Budgetary Control) General Ledger Accounting Entries

14. Setting Up Purchasing

17. Shared information Integrating with Human Resources Define Job & Position Flexfields Oracle Human Resources Oracle Purchasing Employee information Jobs Positions

18. Set Up Personnel Define Jobs Define Positions Define Position Hierarchies Fill Employee Hierarchy

19. Chief Executive Officer Vice President, Manufacturing Vice President, Engineering Director, Materials Management Director, Systems Design Manager, Mfg. Purchasing Manager, Inventory Control Engineer 1 Buyer/ Planner 1 Buyer/ Planner 2 Executive Officer Vice President Vice President Director Director Engineer Manager Manager Buyer/ Planner Buyer/ Planner Position Hierarchy Position Job Legend

22. Set Up Tax Codes Define Tax Name Provide Rate Provide Recovery Rate

23. Define Financial Options Accounting Supplier Entry Supplier- Purchasing Supplier- Payables Encumbrance Tax Human Resources

24. Define Purchasing Options Accrual Options Control Options Default Options Internal Requisition Options Numbering Options Tax Default Options

25. Define Receiving Options Receipt Date Control Over Receipt Control Miscellaneous Options Receipt Routing Receipt Numbering Receipt Account

26. Purchasing Options Affecting Receiving Receiving Control Invoice Matching Invoice Close Tolerance Receipt Close Tolerance Receipt Close Point Expense Accrual Point Purchasing Options Region Default Default Default Control Accrual

27. Set Up Approval Information Define Approval Groups Assign Approval Groups Define Document Controls

29. Document Security: Security Level.. Private Purchasing Oracle Purchasing Buyers Designated Approvers Document Owner Document Owner Designated Approvers Requisition RFQ Quotation Purchase Order

30. Document Security: Security Level Hierarchy Public Document Owner Document Owner All Employees Designated Approvers Security Hierarchy

31. Document Security: Access Level View Only Modify Cancel or Final Close Change Full Change Purchase Order x View View View Requisition RFQ Quotation Purchase Order

32. Define Buyers Employee Item Category Ship-To-Location

33. Define Line Types Value Basis Defaults Category Receipt Required Receipt Closed

36. Payment Terms Scenario Cut-off Day = 15 Day of Month = 20 Months Ahead = 0 Works in TANDEM with ‘Cut-off Day’ , ‘ Day of Month’ &‘Months Ahead’ Payment Due date = Feb20/2003 Terms date basis date = Jan16/2003 Invoice entry Result

37. Define Document Types Document Name Attributes Approver can Modify Can change Forward To Owner Can Approve Approval Workflow Can change Forward From Default Hierarchy Archive On Forward Method Access Level Can Change Approval Hierarchy Security Level Workflow Start up Process

38. Setup of Inventory Item Attributes to be Used by Purchasing Purchased item Purchasable Default buyer List price Internal orders Market price Yes or No Yes User defined User defined Yes User defined Attribute Values

39. Set Up Transaction Managers Receiving Transaction Manager Define Resubmission Levels Document Approval Manager

41. Importance of Supplier Setup Supplier Payment Purchase order Request for quote (RFQ) Receipts Purchase requisition Quotation Returns

42. Paris Washington, D.C. Global Industries, Ltd. Overview of Suppliers Supplier Supplier Site Contact Chicago

43. Washington, D.C. Payment method Terms and conditions Supplier Sites Purchase & Pay site RFQ Only site Purchasing site Not available for ordering or payments. Payment method Terms and conditions Paris Chicago

45. Define Approved Supplier Statuses Define Supplier and Item/Category Combination Set Up Automatic Sourcing Define Supplier- Item Attributes Define Automatic Sourcing Rules

47. Purchasing Periods share GL Calendar Purchasing Periods

48. Inventory Periods share GL Calendar Inventory Periods

50. Internal order Where Requisitions Come From Oracle WIP Other systems Demand Manually create Import requisitions Requesters Oracle Inventory Oracle MRP Source? Requisitions Suppliers Oracle OM

51. Requisition Life Cycle

52. Req Document Details (Header) Preparer Document Number $200 Price Item Number/ Description Quantity $ Currency Source: Vendor / Inventory Request Details (Lines) Internal Deliver to Locations Requestors NOV 21 Vendor Item Number Suggested Buyer Need by Date Requisition Components 1. 2. ------------------

53. Requisitions: Destinations Requisition Lines 1. Inventory 2. Expense Vendor Receive Deliver Inventory Expense

54. Requisition / Purchase Indent Enter Requisitions in the system Import Requisitions from Inventory Requisitions Requisition Pool

58. Mass Forwarding Use the Forward Documents window to forward all or selected documents awaiting approval from one approver to a new approver. This lets you keep your documents moving when the original approver of a document is unavailable.

60. Internal Requisitions Process Flow Internal requisition Run Create Internal Sales Order Run OrderImport Internal sales order Schedule order Pick release Ship confirm Direct update In-transit update

61. AutoCreate

63. Requisition Pool A U T O C R E A T E AutoCreate PO Release RFQ

64. Request for Quotations / Quotations

65. RFQ - Process Requisition Pool Supplier Lists Auto create Auto create Enter RFQ Print RFQ & Send to Suppliers Enter Quotation PO RFQ Quotation

67. RFQ - Components RFQ Document Details (Header) Buyer Item Number/ Description& Category $ Item or Service Details (Lines) RFQ Number RFQ Type Currency Catalog/ Standard/ Bid RFQ Dates -Due Date -Close Date -Effectivity Dates Additional RFQ Line Information Vendors -Supplier List -Individual 1. 2. 3. Terms& Conditions

68. RFQ and Quotation Flow Active supplier quote Request for quotation Quote repository Supplier 1 Supplier 2 Supplier 3 Supplier 4 Quote lines available for use in Purchase Orders

69. Quotation Components Quotation Document Details (Header) Item Number/ Description& Category Item or Service Details (Lines) Quotation Type Catalog/ Standard/ Bid Additional Quotation Line Information Buyer $ Quotation Number Terms& Conditions Vendor Currency 29 Oct- 31 Dec Quote Effectivity $200 Line Price NOV 21 Need By Date Ship To Location Shipment Quantity $200 Shipment Price Quotation Shipment Details Additional Shipment Details -Tax -Matching 1. 2. 3. ------------------

70. Quotation Components Quotation Price Break Details Quantity Ship To Location $200 Unit Price Discount 4. ------------------

71. Quotation Approval Process Why ? - To have a Systematic Control of Approved Quote Usage - To Store Approved quotes in Supplier Catalog for future usage Enforce ? - Ensure Quote Approval Check Control ? - Approve Quotes for Specific Usage with User defined Reason codes Flexibility ? - Analyze Quotes received against Specific RFQ from different Suppliers and selectively approve Individual lines from each source

72. Purchase Orders

74. Purchase Orders Sources Oracle WIP Other systems Demand Manually created Automatically imported Create purchase orders Oracle Inventory Oracle MRP Requisitions Requester Oracle WIP Other systems Oracle Inventory Oracle MRP Oracle Order Mgmt

75. Purchase Orders Requisition Pool Auto create Enter PO Receive against PO Match Invoices In Accounts Payables PO

76. Purchase Order: Types A one-time commitment to purchase items or services from a single vendor. Standard Purchase Order Choose a standard purchase order when you require vendor commitment to specific items/services, quantities and delivery schedules, but a long term agreement is not appropriate. Contract Purchase Order A master ‘terms and conditions’ document for a single vendor. Associate contracts with standard purchase order lines. Negotiate pricing on your entire volume of business. Use a contract to manage terms and conditions for this type of negotiation Document Type Description Suggested Use

77. Purchase Order: Types A long-term agreement allowing for stable pricing over the life of the contract while also allowing flexible delivery schedules and order quantity commitments. Blanket agreements include items and associated price breaks. Blanket Purchase Order Choose a blanket agreement when you’ve negotiated volume discounts and want to create releases against these negotiated volumes, or when you commit to specific items, quantities or amounts. Planned Purchase Order A long-term purchase agreement committing to buy items or services from a single vendor. It includes tentative delivery schedules and accounting distributions. Create scheduled release against planned purchase orders. Choose a planned purchase order when you want to encumber the order before creating releases. Also use to provide vendor scheduling for capacity management while issuing releases to confirm order commitment. Document Type Description Suggested Use

78. Purchase Order: Types Document Type Description Scheduled Release A release against a planned purchase order Blanket Release A release against a blanket purchase order

79. Elements of Oracle Purchase Orders Contract Agreement Header Header Line Header Line Shipment Distribution Blanket Agreement Planned Purchase Order Standard Purchase Order Shipment Distribution Blanket Release Standard PO Scheduled Release Header Line Shipment Distribution Header Line Shipment Distribution

80. Purchase Order Approval

81. PO Document Details (Header) Buyer $200 Price Item Number/ Description& Category Quantity $ Item or Service Details (Lines) NOV 21 Promise by Date Order Number Vendor Currency Vendor Delivery Details (Shipments) Receiving Controls Ship To Location Shipment Quantity Purchase Order Components 2. 1. 3. Tax Details Terms& Conditions ------------------

82. Purchase Order Components ------------------ Internal Deliver to Locations Internal Distribution Details (Distributions) Distributions Accounting Distributions Delivery Quantity Requestors 4.

84. DISTRIBUTION 2 Complex Purchase Order HEADER LINE 1 SHIPMENT DISTRIBUTION 1 LINE 2 SHIPMENT 1 DISTRIBUTION SHIPMENT 2 DISTRIBUTION

95. Overview of Receipt Types Direct Destination type: Inventory, expense, or shop floor Receive Standard Destination type: Receiving Final destination Final destination PO Receipts Location Location Location Inspection Inspection Inspection

96. PO Receipts INVENTORY PURCHASING RECEIPT Dr. Inventory Cr. Accrual A/c DIRECT DELIVERY SHIPMENT P.O.

97. PO Receipts Receiving Site Return Inventory STANDARD RECEIPT SHIPMENT P.O.

98. PO Receipts Receiving Site Inspection Return Inventory INSPECTION REQUIRED SHIPMENT P.O.

99. Matching Concept Match Approval Level Invoice Match Option 2-Way 3-Way 4-Way PO Receipt PO & Invoice Qty PO,Rec’d & Invoice Qty PO,Rec’d, Accepted& Invoice Qty System holds for Invoice Processing are created systematically for any deviations beyond the set tolerances

100. Matching Process Save Invoice Select purchase order or receipt and choose Match Enter supplier information Enter invoice date, number, and amount Complete Complete Complete If matching to PO distribution, choose Distribution and enter distribution quantity or match amount Enter invoice quantity and match amount Enter additional invoice header information Enter purchase order number Select purchase order or receipt Option A: Standard, Expense Report, Mixed, Prepayment, Credit Memo, Debit Memo Option B: PO Default Option C: QuickMatch

101. Vendor Returns PO Receipts Unordered Receipts Return to Supplier Return to Receiving Transactions Actions Features : PO available for Receipt Accounting Reversals Debit Memo Creation Automated optionally

102. Corrections PO Receipts Unordered Receipts Decrease Txn qty Increase Txn qty Transactions Actions Used to Correct erroneous quantity data entry

103. UnOrdered Receipts Inventory Org level Inventory Org Item Level Only Receiving Control Actions

104. UnOrdered Receipts Cycle Create Unordered Receipt Receiving Destination Type Create PO / Release Input Supplier Item code,UOM,Qty Match Unordered Receipt to PO Unordered Receipt Purchase Order Deliver to Inventory

107. Supplier Statuses Approved New Debarred Allow: PO Approval Allow: Sourcing Allow: Schedule Confirmation Allow: Manufacturer Link x Allow: PO Approval Allow: Sourcing Prevent: Schedule Confirmation Allow: Manufacturer Link Prevent: PO Approval Prevent: Sourcing Prevent: Schedule Confirmation Prevent: Manufacturer Link Supply Base Management

108. Supplier Definition and Control Withholding Tax Define Supplier Sites General - Site Uses Contacts Accounting Control Payment Tax Reporting Purchasing Bank Accounts

109. Supplier Lists Supplier Lists RFQ Items Blanket POs / Quotations Approved Supplier Lists Items Suppliers Allocation % Sourcing Rules

110. Supply Base Management Enable item for Approved supplier Define Sourcing Rules Define Supplier Status Create Blanket Agreements Approved Suppliers List Assign Sourcing Rules Supplier Lists (Used for RFQ) Supply Base Management

111. Document Controls

112. Document Controls: PO Action / Level Header Release Line Shipment Cancel Close Close for Invoicing Close for Receiving Finally Close Freeze On Hold Open Open for Invoicing Open for Receiving Release Hold Unfreeze

113. Document Controls: Requisition Action / Level Header Line Cancel Finally Close

115. 2. Expense item accounting on Receipt Account Debit Credit Receiving Inspection account @ PO price XX Expense A/P Accrual account @ PO price XX PO Distribution Charge accounts @ PO Price XX Receiving Inspection account @ PO price XX Receipt Accounting 3. Expense item accounting - Accrue on Period End Account Debit Credit Upon Receipt No Accounting entries Run Period end Accrual process PO Distribution Charge accounts @ PO Price XX Expense A/P Accrual account @ PO price XX Reverse the above GL entry in the subsequent period

116. Purchase Encumbrance

118. Post a Commitment Encumbrance Journal Reverse the Commitment and post an Obligation Encumbrance Journal Reverse the Obligation and post an Actual Payables Journal Set Of Books 1) The user department creates a requisition for new equipment Requisition ----- ----- ------ ----- 2) The Purchasing Department creates a Purchase Order to order the new equipment Purchase Order ----- ----- ------ ----- 3) The Purchasing Department receives an invoice for the equipment from the vendor Invoice ----- ----- ------ -----

119. Encumbered Accounting Flow GL Balances JE Batches Budgeted - Encumbered - Actual = Funds Available Obligation Variance Transaction <Obligation> + Liability Commitment <Commitment> Enter requisition Auto create PO Approve PO Accrue receipt Enter invoice Approve invoice Post invoice batch (GL)