Oracle Purchasing

The purchasing process flow within the Procure to Pay business flow focuses on procurement activities from the request of goods and services to their eventual receipt.

Set ups

Use the Buyers window to define and maintain your buyers. Buyers can review all requisitions using the Requisitions window, and only buyers can enter and autocreate purchasing documents. See the Document Types window for rules governing access to documents

Prerequisites
• Define employees before performing this step. See the online help for the Enter Person window for details.
• Define locations before performing this step

Define employee
HRMS Management -> HRMS Manager -> People -> Enter & maintain
Purchasing -> Setup -> Personnel -> Employee (Only if HRMS is not available)

Approval Groups

Jobs and Positions

• Required
• Generic within Business Group
• Independent of any single organization
• Jobs can occur in many organizations
• Holds Fair Labor Standards Act (FLSA) Code
• Holds Equal Employment Opportunity (EEO) Work Category
• Holds Evaluation Criteria Information
• Associated with Worker’s Compensation Codes

• Optional
• Specific occurrence of one job
• Must be unique within an organization
• Linked to an Organization, Job and Location
• Shared with Other Applications (i.e. Purchasing)
• Position Hierarchies control access to information (security)

• Valid Grades
• Evaluations
• Competencies
• Skills
• Work Choices
• Not Date Tracked

Defining Purchasing Options

Use the Purchasing Options window to define default values and controls for functions throughout Purchasing. You can often override purchasing options when you are creating documents. You can define specific categories of options when you select one of the following:

Defining Control Options

Defining Receiving Options

Use the Receiving Options window to define options that govern receipts in your system. Most of the options that you set here can be overridden for specific suppliers, items, and purchase orders.

Lookup & Quality Inspection Codes

Use the Oracle Purchasing Lookups window to define lookup codes in Purchasing. Purchasing uses lookup codes to define lists of values throughout the system. A lookup category is called a lookup type, and the allowable values for the lookup type are called lookup codes. You can add your own codes to those initially provided for some of the lookup types, depending on your Access Level.

For example, Purchasing supplies the following Supplier Type codes: Employee and Supplier. You might want to define an additional code called Consultant to use for the purchase of consulting services.

Line Types in Purchasing

Oracle Purchasing provides the line type feature so that you can clearly differentiate orders for goods from those for services or outside processing. In addition, the services related line types support a broad range of service categories including general business services, consulting services, and contingent labor.

Usage
Requestors and buyers generally order both goods and services by quantity. You order the number of items you need in a specific unit of measure and at a given price. For instance, a buyer could order 10 computer terminals at a price of $1500 each. Later, the receiving agent records the receipt of one crate of 5 terminals. The accounts payable department receives a bill for 5 terminals, and matches the invoice against the original purchase order. Sometimes, you also need to order services in the same way. For example, you purchase 40 hours of product training at a rate of $40 per hour. You simply record the hours of training ordered and the price per hour. Once you receive the training, you record the hours received.

However, you sometimes order services by amount rather than by quantity. For example, a project manager orders $10,000 of consulting services to install a local area network. In this case, the buyer only needs to record the total amount of the service. When half of the work is complete, the project manager records a receipt of $5000. The consulting firm may send an invoice for the complete amount of the service, or it may send partial invoices. In either case, the accounts payable department must match the invoice to the original purchase order or receipt by amount.

Purchasing provides you with the features you need to order both goods and services. You should be able to:
• Create your own purchasing document line types. For each line type, you should be able to specify the value basis: amount or quantity. If you have implemented Oracle Services Procurement, you have the additional value basis of fixed price
or rate. For both amount and quantity based line types, you can specify default values for category, unit of measure, and whether you require receipt. For quantity based lines, you can specify whether the line type is used for outside processing.
• Create a purchasing document with any combination of line types you need.
• AutoCreate purchase order lines from your requisition lines, grouping requisition lines for the same line type and item onto
the same purchase order lines.
• Create services purchase order lines by selecting a fixed price or rate based line type, category, description, and amount for the line.
• Create amount–based purchase order lines by selecting an amount–based line type, category, item description, and total
amount for the line.

Defining Line Types
Use the Line Types window to define and update line types.

Approval, Security, and Control

Human Resources and Purchasing share job and position information if they are installed together. You should consider your requirements from both perspectives before deciding on an approval/security structure.

Jobs and Positions
Human Resources uses jobs to classify categories of personnel in your organization, and associates information like the exempt/non–exempt code and EEO code with individual jobs.

• Examples of a typical job include Vice President, Buyer, and Manager. Positions represent specific functions within these job categories.
• Examples of typical positions associated with the Vice President job include Vice President of Manufacturing, Vice President of Engineering, and Vice President of Sales.
• Human Resources uses position hierarchies to define management line reporting and control access to employee information.
• Review your Personnel department’s system requirements before you decide how you want to use positions, jobs, and position hierarchies in Purchasing

Approval and Security Setup Steps

Step 3 : Define position

Use the Positions window to create each of the positions in your organization. This step is required if you plan to use either security or position approval hierarchies



Navigation : HRMS -> Work Structures -> Position -> Description

Step 4 : Position Hierarchies

Use the Positions window to create each of the positions in your organization. This step is required if you plan to use either security or position approval hierarchies.

• Use the Position Hierarchy window to build and administer your position hierarchies. There are two distinct uses for position hierarchies in Purchasing:1) document approval routing and 2) document security control. You can use a single position hierarchy for both purposes.
• If you build multiple hierarchies for use in the approval process, it is useful to give them meaningful names. This helps employees quickly choose the appropriate approval path when moving documents from one approval hierarchy to another.
• While you can include a position in many hierarchies, it can appear only once within a single hierarchy.
• If you want to use the document Security Level of Hierarchy for any or all of your document types, the hierarchy you specify in the Purchasing Options window must include all the positions in your organization that should have access to these documents.
• When you build your hierarchies, always begin with the most senior position and work down. Use your organization charts and predefined special approval paths to facilitate this process.

Step 2 : Define Job

Jobs can be generic or specific roles within your enterprise. By definition they are independent of organization structures and are generally used where there is flexibility in employee roles. A ’Job Name’ is a unique combination of values in the segments of the job flexfield structure that you have linked to your Business Group. Enter the FLSA codes for every job you define. For EEO–1 and AAP reporting, you must also enter EEO–1 codes, salary codes and Job Groups.

 

Step 6b : Approval Routing

Purchasing lets you route documents for approval based on either position hierarchies or employee/supervisor relationships.

 

Step 7 : Approval Authorization Rules (Groups)

You can define flexible groups of authorization rules (Approval Groups) which you assign to specific document types and jobs or
positions (based on your implementation). These authorization rules are comprised of include/exclude and amount limit criteria that you specify for Document Total, Account Range, Item Range, Item Category Range, and Location. You can associate multiple approval groups (collections of authorization rules) with a single document/job or position combination to create unique approval structures in support of your organization’s signature policies. Finally, you link employees to authorization limits when you assign them to jobs or positions.

When you attempt to approve a document, Purchasing evaluates the authorization rules associated with your job or position and the document type to determine whether you have adequate authority. If you do not have enough authority to approve the document, Purchasing provides default routing information based on your approval setup. Depending on the level of routing flexibility you specify, approvers may or may not be able to change these defaults.

 

Step 8 : Using Approval Assignments

Use the Assign Approval Groups window to associate approval groups with a specific job or position and a document type including: Purchase Requisition, Internal Requisition, Standard Purchase Order, Planned Purchase Order, Blanket Purchase Agreement, Contract Purchase Agreement, Scheduled Release, and Blanket Release. You can associate multiple approval groups with a single document type/job or position combination. Whenever you associate two or more approval groups with a single document type/job or position combination, Purchasing uses the most restrictive rule to evaluate authorization limits.
Attention: While individual approval groups do not require an enabling Account Range Include rule, every document type for
each job/position must be associated with at least one approval group with this characteristic. Otherwise, employees in the
associated job or position will be unable to approve this document type.

If no approval groups are associated with a particular document type for a given job or position, then employees assigned to this job or position will be unable to approve documents of this type.

Step 9 : Assigning Employees

To assign employee to jobs or positions:
1. Use the Enter Person window to assign employees to jobs or positions. If you are not using position approval hierarchies for document routing, you must provide the employee’s supervisor.

Requisition

With on–line requisitions, you can centralize your purchasing department, source your requisitions with the best suppliers, and ensure that you obtain the appropriate management approval before creating purchase orders from requisitions.

Requisition Structure
Headers
The requisition header contains detail relating to the overall purchase requisition. There can be only one header per requisition.
Lines
The requisition line contains details about the goods or services you want to order. There must be at least one line per requisition.
Distributions
Distributions contain the internal accounting distributions.

Internal Requisitions

Internal requisitions provide the mechanism for requesting and transferring material from inventory to other inventory or expense locations. When Purchasing, Order Management, Shipping Execution, and Inventory are installed, they combine to give you a flexible solution for your inter–organization and intra–organization requests.
With Internal requisition You can be able to:

• Use internal requisitions to move inventory items from one inventory organization to another, even if that organization belongs to a different operating unit, legal entity, or set of books
• Set up your supply chain and automatically source your requirements from inventory or suppliers : Purchasing and Inventory combine to provide the flexibility you need to define your item sourcing information. You can use the default
  sourcing options to automatically determine the correct source type and source for your requests. You can specify either Inventory or Supplier as the default source type, as well as the source organization and subinventory for internal requests.
• Define your inter–organization shipping network, and optionally require that you use internal orders for your inter–organization transfers : Inventory provides the features you need to define your inter–organization shipping network. For transfers between two organizations, you can specify whether to use intransit or direct shipments. You can also require internal orders for transfers between specific organizations.
• Use intransit inventory when you want to track items as they move between organizations
• Automatically generate inventory replenishment requisitions and fulfill them via internal or external suppliers : Inventory generates replenishment requisitions through min–max planning, reorder point planning, subinventory replenishment for
  replenishment counts, and Kanban replenishment. Purchasing uses your item sourcing information to create inter–organization or subinventory transfer requests.
• Automatically source MRP generated requisitions to internal or external suppliers : MRP generated requisitions are sourced using the same item sourcing information that you define for inventory replenishment and on–line requisitions. For ”buy” items, the Requisition Import process uses the item sourcing information to create either a purchase requisition or an
  inter–organization internal requisition for planned orders.
• Creating Online Requisitions : You can create on–line internal requisitions for both expense and inventory destinations using the same windows you use to create purchase requisitions. You can combine inventory and supplier sourced requisition lines on the same requisition. Also, Purchasing uses your item sourcing information to default the correct source type and supplier for the item and destination. You can define requisition templates for commonly requested internally sourced items.

Create internal requisition

Demand for inventory requests can come from several sources. The primary sources are:
• Online user’s request for stock items out of inventory
• Inventory Replenishment Requests
• Oracle Master Scheduling/MRP and Supply Chain Planning generated requisitions
• External system’s requests

To create an internal requisition manually, navigate to Purchasing -> Requisitions -> Requisitions

• Line Type defaults from the DEFAULT tab in purchasing options, change it if required.
• Enter the item, UOM defaults from the UOM for the item in validation org of the item master.(Notes: if there is some list price value in org1 and no price in item master org then the list price in org1 wont default to item in line , why????)

Price is the standard cost of the item

• Enter quantity, need by date and TAX as applicable.

Creation of Internal Sales Orders

Once you approve inventory sourced requisition lines, Purchasing translates the requisition into an internal sales order, providing the link between the requestor’s requirement and the physical demand against inventory. You run two separate batch processes to create the internal sales order from the approved requisition:

• Create Internal Sales Orders.
• Order Import.

Internal orders are automatically scheduled by setting the Schedule Ship Date on the sales order to the Need–by Date from the requisition. If you specify a subinventory on the internal requisition line, Order Management reserves the goods and uses only the specified subinventory for allocation. If the goods do not exist at the specified subinventory, Order Management backorders them, even if they do exist in another subinventory.

Run Import Orders

Order Import creates internal sales orders from the records in the interface table, and determines the order cycle and
defaults values based on the order type.

A Multi–Org implementation of Purchasing enables separate operating units within an organization to operate independently of each other. However, you may still need to obtain goods from another operating unit, and Purchasing supports this. You can create an internal sales order for an item in another operating unit. When creating this internal sales order, you must create it in the destination organization’s operating unit, and all Order Management activity must take place within that destination operating unit. For example, the following table lists the generalized steps involved and indicate the organization in which they take place.

When you use internal sales orders to transfer goods from another operating unit, the items’ transfer cost is posted to the intercompany payables and receivables accounts as defined in the shipping network and an intercompany invoice can be generated.

Management of Internal Sales Orders

You manage internal sales orders using some of the same windows as customer sales orders. Once you import an internal requisition using OrderImport, you can use the Sales Orders window to change the reserved quantity, schedule date, ship–to contact, and shipment priority. The destination organization has complete visibility to any  changes in incoming supply based on schedule date changes or partial shipments.

Purchase Order

Purchasing provides the Purchase Orders window that you can use to enter standard and planned purchase orders as well as blanket and contract purchase agreements. You must be defined as a buyer to use this window.

Purchase Order Types

• You can use blanket purchase agreements to specify negotiated prices for your items before actually purchasing them.
• Blanket purchase agreements can be created for a single organization or to be shared by different business units of your organization (global agreements). You can encumber funds for a blanket purchase agreement.
• You can issue a blanket release against a blanket purchase agreement to place the actual order (as long as the release is within the blanket agreement effectivity dates). If you use encumbrance accounting, you can encumber each release.

Contract Purchase Agreements
You create contract purchase agreements with your suppliers to agree on specific terms and conditions without indicating the goods and services that you will be purchasing.

You can later issue standard purchase orders referencing your contracts, and you can encumber these purchase orders if you use encumbrance accounting.

Global Contract Agreements
You can use global contract agreeements (a special type of contract purchase agreement) to centralize a supplier relationship. Buyers throughout the enterprise can then leverage this relationship by referencing this global contract agreement in your standard purchase orders.

Financials Options

• Purchase Order. Match invoices to purchase orders.
• Receipts. Match invoices to purchase order receipts.
  

Supplier Number Entry. You can enter your supplier numbers manually or let Payables automatically generate sequential supplier numbers for you. You can change the number entry method at any time.

Automatic. The system automatically assigns a unique sequential number to each supplier when you enter a new supplier.
Manual. You enter the supplier number when you enter a supplier.
Attention: Be careful if you switch from manual to automatic entry. Each supplier number must be unique. When you use manual entry, you can assign any number and in any order. If you switch to automatic after entering supplier numbers manually, the system may try to assign a number that you already assigned. If you switch from manual to automatic entry, make sure the next available number for automatic entry is larger than the largest number you have already recorded.

Supplier Number Type. Type of supplier number you want Payables to use for supplier number entry.
Alphanumeric. Numbers, characters, or a combination.
Numeric. Numbers only.
After you begin entering suppliers, you can change your Number Type from numeric to alphanumeric at any time; however, you can change your Number Type from alphanumeric to numeric only if all your current supplier numbers are numeric.

Next Automatic Number. If you select the Automatic Supplier Number Entry method, enter the starting value you want the system to use for generating unique sequential supplier numbers. After you enter a number and save your changes, the system displays the number that it will assign to the next new supplier you enter.

2.2 Supplier-Purchasing

The options you define in this region, except for Inventory Organization, are used as default values for the Purchasing region of the Suppliers window. The supplier values default to new supplier sites for the supplier, which default to new purchasing documents for the supplier site.

Note: If you use the Multiple Organizations Support feature, values you enter in this window will default to both the Supplier and Supplier Site.

You can override defaulted values during entry of the supplier, supplier site, and purchasing documents.

2.3 Supplier-Payables

• Check. You can pay with a manual payment, a Quick payment, or in a payment batch.
• Clearing. Used for recording invoice payments to internal suppliers.
  
• Electronic. You generate an electronic payment file that you deliver to your bank to create payments.
  
• Wire. Used to manually record a wire transfer of funds between your bank and your supplier's bank.
  

Receipt Acceptance Days. If you create interest invoices for late payment, enter the number of days in your receipt acceptance period. If you enable the Recalculate Scheduled Payment Payables option, then Payables Invoice Validation recalculates your invoice due date based on this value. See: Interest Rates.

Always Take Discount. Enable this option to have Payables always take an available discount for a supplier, regardless of when you pay the invoice. See: Discounts.

Pay Alone. If an invoice has the Pay Alone option enabled, Payables creates a separate payment for each invoice. If the Pay Alone option is not enabled for an invoice, the invoice will be paid with other invoices for the same supplier site on a single payment.

3. Encumbrance

To use encumbrance accounting or budgetary control, you must install Payables, Purchasing, and General Ledger. Use this region to enable encumbrance accounting and to specify the default encumbrance types Payables assigns to your invoices, and Purchasing assigns to your requisitions and purchase orders.

If you enable encumbrance accounting or budgetary control, Purchasing creates encumbrances when you reserve funds for a requisition or purchase order. If you use the perpetual accrual method in Purchasing, Purchasing reverses purchase order encumbrances when you inspect, accept, and deliver the units. If you are using the periodic accrual method in Purchasing, Payables reverses the purchase order encumbrances when you create accounting entries for invoices.

Payables creates encumbrances when there is a variance between a matched invoice and the purchase order to which it is matched, and when the invoice encumbrance type is different from the Purchasing encumbrance type. See also: Encumbrances in Payables.

Oracle Financials provides two predefined encumbrance types that you can use to identify requisition, purchase order, and invoice encumbrances: Commitment and Obligation. You can define additional encumbrance types in Oracle General Ledger in the Encumbrance Types window.

Use Requisition Encumbrance. Enable this option to encumber funds for requisitions. If you enable this option, Purchasing creates journal entries and transfers them to General Ledger to encumber funds for purchase requisitions.

Encumbrance Type. If you enable Use Requisition Encumbrance, you must select an encumbrance type by which you can identify your requisition encumbrance journal entries. Purchasing assigns this encumbrance type to the encumbrance journal entries it creates for purchase requisitions.

Reserve at Completion. If you enable Use Requisition Encumbrance, indicate whether you want requisition preparers to have the option to reserve funds. If you do not enable this option, only requisition approvers will have the option to reserve funds.

Use PO Encumbrance. Enable this option to encumber funds for purchase orders, purchase order and receipt matched invoices, and basic invoices (not matched). If you enable this option, Purchasing encumbers funds for purchase orders and Payables encumbers funds for variances during Payables Invoice Validation for purchase order and receipt matched invoices. If you enable this option and enter a non-purchase order matched invoice, Payables will encumber funds for it during Payables Invoice Validation. All Payables encumbrances are reversed when you create accounting entries. If you enable Use Requisition Encumbrance, you must also enable this option.

PO Encumbrance Type. If you enable Use Purchase Order Encumbrance, select a purchase order encumbrance type by which you can identify your purchase order encumbrance journal entries. Purchasing assigns this encumbrance type to the encumbrance journal entries it creates for purchase requisitions and purchase orders.

Invoice Encumbrance Type. If you use purchase order encumbrance, select an invoice encumbrance type by which you can identify your invoice encumbrance journal entries. Payables assigns this encumbrance type to the encumbrance journal entries that it creates. We recommend that you use an encumbrance type different from the Purchasing encumbrance type so you can identify invoice encumbrances.

4. Tax Financials Options
Rounding Rule. Select the method you want the system to use to round the tax amount when it calculates tax in Payables and Purchasing. For example, the calculated tax is 5.988 and your precision is 2 decimal places. If your rounding rule is Up and the currency is USD, then the system will enter 5.99 for the tax amount.

Payables uses the rounding rule you select to calculate tax on invoices, recurring invoices, expense reports, and purchase orders. The value you enter here defaults to new suppliers. You can override this value at any level. If you update it in the Financials Options window, it will not affect existing suppliers and will default only to new suppliers.

Payables rounds to the Minimum Accountable Unit if you entered a value for that field. Otherwise, it rounds to the precision you enter. The examples below assume you are using a Minimum Accountable Unit of .01 and the currency is USD.

Up. Round up. For example, round $5.988 to $5.99
Down. Round down. For example, round $5.988 to $5.98
Nearest. Round to the nearest number, and if the difference between Up and Down is equal, round Up. For example, round $5.988 to $5.99
Payables also uses the rounding rule you select to calculate the splitting of tax between recoverable and nonrecoverable tax lines. See: Calculation of Tax Distributions.

Precision. Enter a one-digit whole number to indicate to which decimal place you want to round automatically-calculated tax amounts in Payables and Purchasing. For example, the calculated tax amount is $121.011 and you round Nearest. If the precision is 2, the system will enter $121.01. If the precision is 0, the system will enter $121.00.

The system will use the lower of the precision entered here and the default precision for the currency. For example, if your functional currency is USD, and you enter a precision of 3, the system will use a precision of 2.

The system uses the value you enter for this option for all new tax amounts that are calculated automatically. This is the precision value for tax calculation throughout the system and you cannot override it anywhere else.

The system will disregard any value you enter for Precision if you enter a value in the Min Accountable Unit field.

Min Accountable Unit. Indicate the smallest monetary unit to which you want to round the tax amount. For example, the currency is USD, the calculated tax is 5.541, and your Rounding Rule is Nearest. If your Minimum Accountable Unit is .01 (one cent), the system will enter 5.54. If your Minimum Accountable Unit is .05 (five cents), the system will enter 5.55.

Attention: Do not enter a minimum accountable unit that has more decimal places than your functional currency or your invoice distribution amounts may not match your invoice amount after rounding. This may cause a distribution hold on your invoice.

The system uses the value you enter for this option for all new tax amounts Payables calculates automatically. The precision used in tax calculations will be the same number of decimal places as your Minimum Accountable Unit. This is the precision value for tax calculation throughout the system and you cannot override it anywhere else.

Default Tax Code. Tax code default value for the Invoice Tax Code option in the Suppliers window. In addition, you can include this tax code value in your Tax Code Defaults hierarchy that you define in the Payables Options window if you select Financials Option as a hierarchy source. This hierarchy is used throughout Payables to default tax code values to documents. See: Defaulting Tax In Payables.

If you choose a tax code for which you have defined different tax rates for different effective date ranges, (or include such a tax code in a tax group), Payables automatically uses the appropriate rate during invoice entry based on the invoice date, or for an expense report, the receipt date.

Member State. The location of your company or organization. Payables uses this country name to determine if your company or organization is located in a member state of the European Union (EU).

VAT Registration Number. The Value-Added Tax (VAT) registration number for your organization. Your organization is assigned a VAT Registration Number if you register to pay VAT. The first two characters of a VAT registration number are the country code for the country or state where the registered company or organization is located. Payables prints this number on the header of the Intra-EU VAT Audit Trail Report.

Enable Recoverable Tax. Enable this option if you want Payables to do any of the following:

• flag tax type distributions as recoverable for reporting purposes
• split taxes into separate recoverable and nonrecoverable lines. For more details, see: Partially Recoverable Tax.
  
• automatically calculate tax and prorate it back to the GL account of the taxable distribution. See: Using the Automatic Tax Calculation Feature to Prorate Tax in the Invoice Workbench.
  

• In HR tab we mention the employee number generation method.
• If we follow position hirerachry or not

Purchase Order Preferences

Definition
Use the Preferences window to enter values that will default to all purchase order headers, lines, shipments and distributions that you enter. By using preferences, you have essentially gained an additional level of defaults in the Default Value Hierarchy. Recall that the Purchasing Default Value Hierarchy includes the following: Financials Options, Purchasing/Receiving Options, Supplier, Supplier Site, Item and PO Documents.

•  There must be an organization and a location.
•  The location must belong to the organization or not be assigned to any organization.
•  If the line contains an item (and optionally a revision), that item (and revision) must be valid in the default shipment organization.

•  If the Destination Type is Inventory, the line must have an item that is stock enabled in the ship–to organization. Also, if a default subinventory has been entered, it must be defined in the ship–to organization.
•  The Account Generator must be able to supply the accounts. If the Destination Type is Expense, you can enter a default charge account, which overrides any account supplied by the Account Generator.
• If you are using encumbrance accounting, you must enter a default GL date.

• Select Confirming Order to indicate that this order is confirming a previous informal order with the supplier.
• If you are referencing contract purchase agreement on a standard purchase order, enter the Contract number. The contract must be effective; that is, the current date has to be within the effective date and the expired date of the contract. If you reference a contract purchase agreement on a standard purchase order line, Purchasing adds the total amount of the purchase order line to the total amount of the contract.

Purchase Order Headers

The upper part of the Purchase Orders window has the following display–only fields:
Created – The system date is displayed as the creation date.

Contact- Contact person of the supplier site.

Currency – Purchasing displays the functional currency. This is overridden by supplier currency information.

Total – For standard and planned purchase orders, Purchasing displays the current Total order amount.

Amount Agreed – For blanket and contract purchase agreements only, Purchasing displays the agreed–to amount for the agreement.
The amount Released value should not exceed the Amount Agreed. (Note also that if you change the Amount Limit in the Terms and Conditions window, the Amount Agreed should be equal to or less than the Amount Limit.)

Released – For blanket and contract purchase agreements only, Purchasing displays the current total amount Released. The
amount released is 0.00 until you create releases against the blanket purchase agreement or reference the contract on a standard purchase order.

Purchase Order number: Enter a unique Purchase Order number. The Revision is displayed to the right of the number. If you chose automatic purchase order number generation in your Purchasing Options, the cursor does not enter this field and the number is generated when you save your work.

Order Type: Choose the purchase order Type Standard Purchase Order, Planned Purchase Order, Blanket Purchase Agreement, Contract Purchase Agreement. Attention: The names of the above purchase order types can be modified in the Document Types window.

Supplier: Enter the name of the Supplier for this purchase order. To approve a purchase order, you must provide a supplier.
Attention: You cannot change the supplier once you approve the purchase order. The purchase order becomes a legal document when you approve it. To change the supplier after you approve a purchase order, you must cancel the existing purchase order and create a new one for the other supplier

Supplier Site: Enter the Site of the supplier you want to use for your purchase order. If the supplier you choose has only one site, it is defaulted into this field. Before you can approve a purchase order, you must provide a site.

Once the purchase order is approved, you can change the supplier site only if the PO: Change Supplier Site profile
option is set to Yes. And only sites with the same currency as the previous site can be used. If you change the supplier site, the revision will be incremented, and will require reapproval. You cannot enter the supplier site until you have entered a supplier.
You can optionally enter the name of the Contact at the supplier site. If the supplier you choose has only one contact name, it is defaulted into this field. You cannot enter a contact until you have entered a supplier site.

Ship To and Bill To : Enter the Ship To and Bill To locations for the purchase order. If you entered a supplier and supplier site, the Ship To and Bill To defaults reflect the locations you assigned to the supplier or supplier site. You can accept these values or change them to other locations

Buyer Name : If the Enforce Buyer Name option in your Purchasing Options is set to Yes, your name is displayed as the Buyer, and you cannot change this value. Otherwise, you can enter the name of any buyer.

Status – Possible order status values are:
Incomplete :The order has not been approved.
Approved :You have approved the order.You can print it and receive items against it.
Requires Reapproval :You approved the order and then made changes that require you to reapprove it.

P–Card – Purchasing displays a procurement card number if the purchase order was created from an iProcurement requisition that used a corporate credit card for the purchase. This field displays if the profile option PO: Use P–Cards in Purchasing is set to Yes. Only the last four digits are displayed. Procurement cards can be used for items with a Destination Type of Expense, for documents that do not contain a Project number, and for standard purchase orders or releases only.

Description - Enter a Description of the purchase order. These comments are for internal use only and do not print on the purchase order. You can enter up to 240 characters. If you want to add unlimited notes, use the Attachments feature.

Global box - For blanket or contract purchase agreements, check the Global box to indicate that this is a global agreement that can be assigned to other operating units. This checkbox cannot be deselected once you have saved the document.

Purchase Order Lines

1. Lines
Use the Lines tabbed region in the Purchase Orders window to create purchase order lines.
When you save your work, Purchasing creates shipments and distributions if sufficient valid default information is available. Use the Purchase Order Shipments window to review, edit, and create multiple shipment lines for each purchase order line

Entering Currency Information

(Usage
Most of the time the primary currency we have defined in our GL is used for creating purchase order but if the supplier requests and we want to do the payment to the supplier in a different currency we can do that by changing the currency in PO currency form.
The convesrion rate is required as the system 'll transact only in the functional currency. The conevrsion rate can be globally mentained by using a corporate rate but in case of smaller firm where couple of people deals with the purchasing then they can use the user conversion type and put any conversion rate)

Use the Currency window to enter and change currency information for purchase orders, RFQs, and quotations.
For purchase orders, you can change currency information until the purchase order is approved or encumbered. Note that changing the purchase order supplier to one that uses a different currency overrides any information you have entered in this region.

Receiving PO

Receiving is essentially a two step process - you receive onto your receiving dock and then the second step is to deliver to either an Expense destination (like an office supply room) or to an Inventory destination (like a subinventory in a warehouse). There are also intermediate steps in the receiving flow process after receipt for Inspection capability to inspect the received items before delivering.

The accounting transactions essentially mirror the above receiving flow, to allow visibility of the various liabilities as products, goods and services essentially flow through the receiving business processes you will encounter accounting entries in various accounts for each step in each process.

You can print the receiving and inspection documentation you need. For example, you can print Receipt Travelers. Also, you can prepare for incoming receipts by printing the Expected Receipts Report to help you identify items and quantities you expect to receive. You can use this report to plan your work, identify receipts satisfying an urgent demand, and control unexpected receipts. Finally, you can produce summary and detail receiving transaction reports by item, supplier, purchase order number, and/or receiving date range.

Receiving Locations
Receiving locations are designated areas in which you temporarily store items before you deliver them to their final destinations. Your receiving dock and the area in which items are inspected are receiving locations. Receiving locations are not required when the routing is Direct Receipt, when you are delivering goods to their final locations. However, when the routing is Standard Receipt, you initially receive the items into a receiving location, and you must specify the receiving location. If the routing is Inspection Required, you could transfer the items to an inspection location before delivering them to their destination. If necessary, you can create additional receiving locations, such as a cold storage area where items can be held pending inspection.

Important Features
1. Receive services, inventory, expense, and outside processing items using one screen. You acknowledge receipt of services by receiving amounts of the service, generally related to receipt of an invoice. You receive inventory items to expense or asset Subinventories, you receive expense items to the requestor, and you receive outside processing to the shop floor

2. Distinguish closed for invoicing from closed for receiving. Purchasing automatically closes your purchase order for receipt when it is fully received. You can manually close partially received purchase orders if you no longer expect any more receipts against them. Close for invoicing and close for receiving are managed using tolerances. You can specify that when you have received a certain percentage of a shipment, Purchasing will close the receipt. This is a soft close, and you can reopen the receipt. Purchasing rolls up closing to the line and header level, and "Closed" information does not show in the Open Purchase Orders Report. Also, if there is a remaining balance, closed quantities are no longer visible as supply scheduled receipts to MRP/ATP.

3. Decide how you accrue un-invoiced receipts. For instance, you can accrue receipts perpetually or at period-end for expense items. Purchasing uses perpetual accrual for your inventory and shop floor item receipts. Purchasing and Inventory together provide you with perpetual visibility and control on your accrued liabilities for inventory items. Inventory lets you maintain the value of your inventories on a perpetual basis. And Purchasing automatically records your accrued liability in your general ledger as you enter receiving transactions. Purchasing also provides you with complete visibility and control of your inventories values, accrued liabilities for inventory and non-inventory items, purchase price variances, and invoice price variances. And Purchasing provides you with the information you need to facilitate your period close and your inventory, purchasing, and payables reconciliation process.

4. Identify and handle hazardous materials. You can use attachments to provide detailed handling instructions. Purchasing displays hazardous material information in the receiving, transfer, and inspection windows as well as on the Receipt Traveler.

5.1. Record returns to suppliers. You can return items that are damaged on receipt or that fail your inspection process. If you return items that you have already delivered to inventory, Purchasing automatically updates the inventory stock levels.
5.2. Enable the automatic creation of debit memos for Return to Supplier transactions.

Accounting transactions in PO

Definition of Items used in Purchasing
There are 3 kinds of  Items used in Purchasing.

Expense Items -               Referred to as Item A
Inventory Expense Items - Referred to as Item B
Inventory Asset Items  -    Referred to Item C

1) Expense Items - Referred to as Item A.
These items normally have  the following attributes.
       INVENTORY_ASSET_FLAG = N
        PURCHASING_ITEM_FLAG = Y
        INVENTORY_ITEM_FLAG =  N
       
2) Inventory Expense Items - Referred to as Item B
These items normally have  the following attributes.
    INVENTORY_ASSET_FLAG = N
    PURCHASING_ITEM_FLAG = Y
    INVENTORY_ITEM_FLAG =  Y
       
3) Inventory Asset Items  - Referred to Item C
These items have  the following attributes.
    INVENTORY_ASSET_FLAG = Y
    PURCHASING_ITEM_FLAG = Y
    INVENTORY_ITEM_FLAG =  Y
    COSTING_ENABLED_FLAG = Y 

PO Account Generator
The account generator behaviour will also depend on
- the destination org (on the po shipment)
- the destination type (inventory or expense) on the po distribution

You also need to remember that the item expense account defaults from the org when items are created, but you probably need to set a specific value for an item.

PO Accountings
1. Receving A/C - Defaults fro receving options for the receving organization

2.1.  I/V A/P Accrual account A/C - Defaults from Org parameter Other Acc tab

2.2  Expense A/P accrual A/C - Default from purchasing parameter Receipt Accounting tab

3.1 PO Distribution Charge (Delivery Acc) for Non Inventory Expense A/C -  Defaults from Item Exp A/C
                            
3.2 Delivery Acc for Asset Item A/C -  Mat. A/C from
                                                                        i>Sub Inevntory
                                                                        ii>Org Parameter

3.3 PO Distribution Charge Delivery Acc for Inevntory Expense A/C -  Defaults from A/Cs in following precedence
                                                                           i>Sub Inventory Expense A/C
                                                                           ii>Expense A/c in Item Master if above A/C is not available
                                                                           iii>Expese A/C from Org parameter if above 2 A/Cs are not avaialble

3.4 When Purchase Order is created with out an item number (In case of Non_inventory Items, item number exists but the inventory field is disabled but PO can also be created for items which are not defined in inventory) with value basis as Amount (i.e. Purchase basis as Service) - The PO charge A/C needs to be manually entered.

Notes:
1. We can have two differnt distribution lines for a single shipment.
In case of inventory items if the item is received in two differnt subinventories then we can create two differnt distribution lines for the same shipment and the charge a/c would default from subinventories if exits
In case of Non-Inventory items we can manually select as many charge a/cs as required.

2. In standard PO WF For an inventory expense PO charge a/c to default from the sub-inventory level, the item must be restricted to the subinventory.

1. Inventory Asset Items
Receiving:
Receiving Inspection account @ PO price XX Dr.
                                               Inventory A/P Accrual account @ PO price XX Cr.
Delivery:
Subinventory accounts(PO Charge A/c) @ standard cost XX  Dr.
                                               Receiving Inspection account @ PO price XX Cr.
                                               Debit/Credit Purchase Price Variance
and, if applicable
       Subinventory Mat Over Head XX Dr
                                                     MOH Absorption XX Cr
PPV = (PO unit price – standard unit cost) x quantity received

Invoice:
Inventory A/P Accrual account Dr.
                                                Supplier Liability A/C cr.

2. Inventory Expense Items
Receiving:
Receiving Inspection account @ PO price XX Dr.
                                                Inventory A/P Accrual account @ PO price XX Cr.
Delivery:
Sub inv Expense A/c(PO Charge) Dr.
                                                 Reciving Valuation A/c Cr.
Invoice:
Inventory A/P Accrual account Dr.
                                                 Supplier Liability A/C cr.

3. Fixed Asset Item (Same as 4. Expense Items Accrual @ Receipt)
Receiving:
Receiving Inspection account @ PO price XX Dr.                                                       Org Parameter
                                                Expense A/P Accrual account @ PO price XX Cr.        Purchaing Parameter
Delivery:
Asset clearing accounts(PO Charge A/c) @ standard cost XX  Dr.                         item/employee
                                               Receiving Inspection account @ PO price XX Cr.
                                               Debit/Credit Purchase Price Variance                           PPV=Chrage AC
Invoice:
Expense A/P Accrual account Dr.
                                               Supplier Liability A/C cr.                                                    Supplier Site

POST Mass addition:
Asset Cost A/C Dr.                                                                                                          Asset category
                                            Asset Clearing A/C Cr.                                 

Depriciation :
Depriciation expense A/C Dr.                                                                         Asset - Expense A/C
                                                  Accumulate Depriciation Exp Cr.                 Asset Category


4. Expense Items Accrual @ Receipt
Receiving:
Receiving Inspection account @ PO price XX Dr.
                                                Expense A/P Accrual account @ PO price XX Cr.
Delivery:
Item Expense A/c(PO distribution charge A/C) @ PO price XX Dr.
                                                Receiving Inspection account @ PO price XX Cr.
Encumbrance @ PO price XX Dr.
                                                Reserve for Encumbrance @ PO price XX Cr.
Invoice:
Expense A/P Accrual account Dr.
                                                 Supplier Liability A/C cr.

5. Expense Receipts Accruals–Period End
There would be no accounting in exepnse material receving and delivery.
When an invoice is created and matched to the PO for the expense item, charge a/c is debited to Supplier Liability A/C.
PO Charge A/C (Item Exp./Sub Exp.) Dr.
                                    Supplier Liability A/C Cr.

Purchasing does not record any accounting entries for expense during a receiving transaction if you use period–end accruals. You record all of your uninvoiced liabilities at month end using the Receipt Accruals – Period–End process. Use the Receipt Accruals – Period End process to create period–end accruals for your uninvoiced receipts for expense distributions. Purchasing creates an accrual journal entry in your general ledger for each uninvoiced receipt you choose using this form. If you use encumbrance or budgetary control, Purchasing reverses your encumbrance entry when creating the corresponding accrual entry.
Purchasing never accrues an uninvoiced receipt twice. Each time you create accrual entries for a specific uninvoiced receipt, Purchasing marks this receipt as accrued and ignores it the next time you run the Receipt Accrual – Period–End process. Purchasing creates accrual entries only up to the quantity the supplier did not invoice for partially invoiced receipts.

Purchasing creates the following accounting entries for each distribution you accrue using the Receipt Accruals – Period–End process:
PO charge account @ Uninvoiced Quantity x PO unit Price XX  Dr.
                                                                Expense A/P accrual account @ Uninvoiced Quantity x PO price XX  Cr.
As soon as you open the next period, Purchasing reverses the accrual entries using the following accounting entries:
Expense A/P accrual account @ Uninvoiced Quantity x PO price XX  Dr.
                                                                 PO charge account @ Uninvoiced Quantity x PO unit Price XX Cr.

6. Standard Invoice
Charge Acoount Dr.
                     Supplier Liability A/C Cr.

Encumbrance Accounting
1. PO Approval/Fund reserved
Encumbrance (Budget A/C in PO distribution) A/C Dr.

When the program - Create Journal runs in GL the encumbrance A/C is created and after posting into GL the Reserve Encumbrance A/C is credited.
So Final Accounts
Encumbrance A/C Dr.
                      Reserve for Encumrance Cr.

2. Receving
Recving Inspection A/C Dr.
                         A/P Accrual A/C cr.

3. Delivery
Inv valuation  Dr.
                        Receiving Inspection Cr.
                        Encumbrance Reversal Cr.
   Purchase price variance or rate variance

4. Invoice
In case of matched with a PO, Payables encumbers funds for variances during Payables Invoice Validation for purchase order and receipt matched invoices.
If you enter a non-purchase order matched invoice, Payables will encumber funds for it during Payables Invoice Validation.
All Payables encumbrances are reversed when you create accounting entries. If you enable Use Requisition Encumbrance, you must also enable this option.

Expense Items
Receiving:
Reciving Valuation A/c Dr.
                                   Expense A/P Accrual A/c Cr.
Delivery:
Expense A/c Dr.
                                   Reciving Valuation A/c Cr.

Inventory Expense Items
Receiving:
Reciving Valuation A/c Dr.
                                   Inv. A/P Accrual A/c Cr.
Delivery:
Expense A/c Dr.
                                   Reciving Valuation A/c Cr.

Asset Items
Receiving:
Reciving Valuation A/c Dr.
                                   Inv. A/P Accrual A/c Cr.
Delivery:
Mat. Valuation A/c Dr.
                                   Reciving Valuation A/c Cr.

Entering Express Receipts

The express function is a quick method of entering receipts and receiving transactions. This function is available in the Receipts window if you have specified or inferred a source in the Find Expected Receipts window. (The source would be inferred if you entered, for example, a purchase order number.) In the Receiving Transactions window, the express function is available for deliveries regardless of your search criteria in the Find Receiving Transactions window. Performing any manual action in a line disables the Express button, and it is not enabled until you have again selected the Find button.

When you select the Express button in the Receipts window, Purchasing displays the Express Details window in which you must enter the destination: Final Destination or Receiving location. When you select the OK button, all lines are selected and the Express button changes to Unexpress. When you select the Express button in the Receiving Transactions window, all lines are selected and the Express button changes to Unexpress. In either case, you can select the Unexpress button to return to manual mode. Otherwise, you can deselect lines to omit them from express processing and then save your work to initiate express processing.

Note: You cannot perform data collection using Oracle Quality when you select the Express button in the Receiving Transactions window
 


To find source documents:
1. Navigate to the Find Expected Receipts window by selecting Receipts on the menu.
2. Enter search criteria to find the source documents for which you want to enter express receipts. You must include the supplier or organization in the source criteria.
3. Select the Find button to display the Receipts window with line(s) available for receipt displayed in the Lines alternative region.
 

To enter express receipts:
1. Select the Express button to open the Express Details window.
2. Select the Destination Type: Final Destination or Receiving location.
3. Select the OK button. This changes the Express button to Unexpress and selects all the lines for express receipt.
4. Optionally deselect individual lines to omit them from the express receipt.
5. Save your work to begin express receipt validation processing.
 

Cascading Receipts and Receiving Transactions

The Cascade function facilitates the distribution of a given quantity of an item from a single supplier across multiple shipments and distributions. This function is available in the Receipts window if you have specified or inferred a source and an item in the Find Expected Receipts window. (The source and item would be inferred if you entered, for example, a purchase order number.) In the Receiving Transactions window, the cascade function is available for deliveries if you have specified or inferred an item in the Find Receiving Transactions window. Performing any manual transaction in a line disables the Cascade button, and it is not enabled until you have again selected the Find button in the appropriate Find window.

When you select the Cascade button, Purchasing displays the Cascade Details window in which you must enter the cascade quantity and the unit of measure. When you select the OK button, the cascade process begins.

The process starts at the first displayed line and allocates the supply available to receive/deliver to that line from the cascade quantity you entered. The process continues to the next line and again allocates the quantity available to receive/deliver, continuing until either the process reaches the last queried line or the cascade quantity is exhausted. Since the lines are displayed in order by promised date/need-by date, the process operates as a First In/First Out procedure. If you entered a cascade quantity larger than the quantity available to receive/deliver, Purchasing displays a dialog window explaining that the process could allocate only so many. If the quantity available to receive/deliver is greater than the cascade quantity, the last receipt/delivery may be partial. To clearly indicate that the cascade quantity has been exhausted, Purchasing displays a transaction quantity of 0 for the remaining lines.
 

The cascade function does not modify any destination information; it uses the information defined by the routing and defaulted from the shipment.

If a given shipment line has multiple distributions and the default routing for that line is direct receipt, the cascade process explodes the line and allocates the quantity available on the shipment line to the component distributions based on the supply available for the distribution. If you have over distributed a given line, Purchasing allocates all remaining supply for the shipment to the last distribution. If you have over delivered the transactions with prior receipts or transactions, then the process may fill the lines with undesired values, but you can reallocate in this situation once the cascade process is complete.

Record validation is disabled during the cascade process to facilitate the running of the process, but all lines are validated when you save them. Quantities are applied to lines in the expectation that you will transact the line as the default routing intended. However, you can manually override these values.

Accountings in PO

Inventory Accruals
Inventory and Purchasing provide you with visibility and control of your accrued liabilities for inventory items. Purchasing automatically records the accrued liability for your inventory items at the time of receipt as perpetual accruals. This transaction is automatically recorded in your general ledger at the time of receipt (unless you specified otherwise when setting up periodic costing). The inventory expense is recorded at delivery if you use Standard Delivery and at receipt if you use Direct Delivery. You have options to determine whether Purchasing and Inventory reverse encumbrances. The option used is dependent on how you compare encumbrance to budget balances in inventory for your organization.

Expense Period–End Accruals
Purchasing optionally accrues uninvoiced receipts of non–inventory items when you close a period. You can choose which uninvoiced receipts are accrued. At period end, Purchasing automatically creates a balanced journal entry for each uninvoiced receipt, which will automatically be reversed at the beginning of the next period. Purchasing creates a reversing entry for the encumbered amount corresponding to the expense while creating an accrual entry for the receipt in the general ledger if you are using encumbrance at your site.

Expense Perpetual Accruals
Purchasing optionally provides you with the ability to accrue non–inventory liabilities at the time of receipt. If you choose at time of receipt, Purchasing records an accrued liability and charges your receiving inspection account for each non–inventory receipt. This transaction is automatically recorded in your general ledger at the time of receipt. Purchasing creates a reversing entry for the encumbered amount at the time you deliver the goods to the final inventory or expense destination. When an invoice is matched to a purchase order and approved in Payables, it is not necessary for Payables to record an
encumbrance for the expense. However, Payables will record an encumbrance for invoice price variance or exchange rate variance, if the variance exists.

Purchase Price Variance
Purchasing and Inventory provide you with visibility and control of your purchase price variances. When you use standard costing, Purchasing and Inventory automatically calculate and record purchase price variances as you receive your inventory items into inventory. If desired, Purchasing and Inventory automatically calculate and record purchase price variances for your outside processing receipts into work in process. You can use the Purchase Price Variance Report to review the accuracy of the standard costs for your purchased items and services.

Invoice Price Variance (IPV) and Exchange Rate Variance
Purchasing and Inventory provide you with visibility and control of your invoice price and exchange rate variances. When Payables accounts for invoices, it automatically creates accounting entries for price and exchange rate variances. You can use the Invoice Price Variance Report to review the accuracy of your purchase order prices.

Foreign Currencies
If the purchase order uses a foreign currency, Purchasing converts the purchase order price to the inventory functional currency. Inventory uses this converted value for receiving accounting purposes. Payables allows you to record exchange rate invoice variance to separate accounts.

Nonrecoverable Tax
If you use nonrecoverable or partially recoverable tax, the nonrecoverable tax amount is included in your period-end or perpetual accrual accounting. Nonrecoverable tax is also included in the invoice and exchange rate variances. Changing the exchange rate on the receipt may affect the nonrecoverable tax amount. See: Tax Defaults in Purchasing. See: Entering Receipt Lines.

Accrual Reconciliation and Write-Off
Purchasing and Inventory provide you with a complete reconciliation report of all of your accounts payable accrual transactions. You can quickly identify any mismatched items and write-off accrual transactions from your receiving, accounts payable, inventory, and work in process subledgers. See: Reconciling A/P Accrual Accounts Balance.

Expense Accrual Reporting
You can use the Uninvoiced Receipts Report to analyze your uninvoiced receipt liabilities for non-inventory purchases when you create accrual entries for them in your general ledger. You can control the amount of expenses you accrue by supplier and purchasing category. You can obtain detailed information about the purchase order receipts you accrued during your accounting period. See: Uninvoiced Receipts Report.

Period-End Accruals and Encumbrance
For period-end accruals when using encumbrances, Purchasing creates a reversing entry for the encumbered amount corresponding to an expense while creating an accrual entry for the receipt in the general ledger. When you accrue your receipts, Purchasing ensures that you do not duplicate entries for the period. At the beginning of the following period, you reverse the accrual entry for the expense and recreate the encumbrance entry you reversed in the previous period using General Ledger. See: Receipt Accruals - Period End Process.
If you use nonrecoverable or partially recoverable tax, the nonrecoverable tax amount is included in your encumbrances.

Inventory and Perpetual Expense Accruals and Encumbrance
For perpetual expense and inventory accruals, Purchasing and Inventory create a reversing entry for the encumbered amount at the time you deliver the goods to the final inventory or expense destination. When an invoice is matched to a purchase order and approved in Payables, it is not necessary for Payables to record an encumbrance for the expense. However, Payables will record an encumbrance for invoice price variance or exchange rate variance, if the variance exists.
If you use nonrecoverable or partially recoverable tax, the nonrecoverable tax amount is included in your encumbrances.

You need to define the following accounts before entering transactions in Purchasing and Inventory.

1. Receiving Account
Enter the general ledger account to record the current balance of material in receiving and inspection.Use the Define Organization or Receiving Options window to set up this account.
 

2.a. Inventory A/P Accrual Account

Enter a general ledger account to accumulate the inventory accounts payable accrual for this organization. This is the account used by Purchasing to accrue your payable liability when you receive your items. This account represents your uninvoiced receipts and is usually part of your accounts payable liabilities in the balance sheet. Payables relieves this account when the invoice is matched and approved.

2.b. Expense A/P Accrual Account
Enter a general ledger account to accumulate the expense accounts payable accrual for your purchasing installation. This is the account used by Purchasing to accrue your accounts payable liability for expense items at time of receipt when your Expense Accrual Option is On Receipt, or at period-end when your Expense Accrual Option is Period End. This account represents your uninvoiced receipts and is usually part of your accounts payable liabilities in the balance sheet.

Use the Purchasing Options window to set up this account.

3.a Purchase Price Variance Account
Enter a general ledger account to accumulate purchase price variance for this organization. The purchase price variance account is usually an expense account. This is the variance that you record at the time you receive an item in inventory, and is the difference between the purchase order cost and an item's standard cost. Purchasing calculates purchase price variance as:

PPV = (PO unit price - standard unit cost) X quantity received

Purchase price variance is not used for average costing.

Use the Organization Parameters window to set this account.

3.b. Invoice Price Variance Account
Enter a general ledger account to accumulate invoice price variance for this organization. This is usually an expense account.

IPV = (PO unit price - Invoice Price) X quantity invoiced

Invoice price variance is the difference between the purchase order price for an inventory item and the actual invoice price multiplied by the quantity invoiced.
Purchasing uses this account on the PO distribution when the requisition or purchase order is created. When Payables matches and approves the invoice, Payables uses the invoice price variance account from the purchase order to record invoice price variance entries. In addition, if you have exchange rate variances, Payables also records invoice price variance for exchange rate gains and losses.

Use the Organization Parameters window to set this account.

3.c. Exchange Rate Gain or Loss Accounts
Enter general ledger accounts to accumulate exchange rate gains or losses for this organization. These are usually expense accounts.
Exchange Rate Gain Or Loss = (Exchange rate used for PO - Exchange rate used for Invoice Price)

Exchange rate gain or loss accounts are used to record the difference between the exchange rate used for the purchase order and the exchange rate used for the invoice.

Use the Accounting region of the Financials Options window to set up these accounts.

4. Mat. Valuation Account
If the material that we deliver is an inventory asset then the inv valaution account that we define in organization parameter gets debited.

If the material that we deliver is an inventory expense item then the expense account that is attached to the item in item master PO tab is debited.

If the material that we deliver is an non-inventory expense item then the expense account that is attached to the oraganization(or subinventory if the subinventory has a differnt excepnese a/c) parameter

Account Generator

The default Account Generator processes in Oracle Purchasing build a charge, budget, accrual, and variance account for each purchase order, release, and requisition distribution based on the distribution's Expense, Inventory, or Shop Floor destination type. Oracle Purchasing always builds these accounts using the Account Generator; you cannot disable this feature.
 

All purchase orders, requisitions, and releases require accounting distributions. Oracle Purchasing automatically builds a charge, budget (if using budgetary control), accrual, and variance account for each document distribution.

Oracle Purchasing provides you with the features you need to:

• Improve accuracy and speed document generation by automatically constructing accounting distributions.
  
• Relieve buyers, requestors, and document preparers from the responsibility of specifying which accounts should be charged for their purchases.
  
• Customize Account Generator account construction rules to match your business rules.

How to Use the Account Generator
The Account Generator in Oracle Purchasing utilizes Oracle Workflow. You can view and customize Account Generator processes through the Oracle Workflow Builder. You can also monitor account generation through the Oracle Workflow Monitor.

Before using the Account Generator on a production database in Oracle Purchasing to build accounts for purchase order, release, and requisition distributions, you must:

• Define your Accounting Flexfield structure for each set of books.
• Define flexfield segment values and validation rules.
• Choose whether you want to use the default Account Generator processes, or if you need to customize them to meet your accounting needs.

Then do one of the following for each set of books

1. Choose to use the default Account Generator processes.
2. Customize the default Account Generator processes, test your customizations, and choose the processes for a flexfield structure, if necessary.

 

What the Account Generator Does in Oracle Purchasing

For Inventory charge account construction, the Account Generator further distinguishes between asset and expense purchases based on the item and subinventory that you provide for the distribution. If you select an expense item, the Account Generator disregards the subinventory and builds an expense charge account. If you select an asset item, the Account Generator evaluates the subinventory to decide whether to build an expense or asset charge account.

    Additional Information: You classify a subinventory as Expense or Asset by selecting the Asset Subinventory check box in the Oracle Inventory Subinventories window. You classify an item as Expense or Asset by selecting the Inventory Asset Value check box in the Costing section of the Master Item window. (This window is accessible through Inventory or Purchasing.)

When the Account Generator locates a source account based on the distribution destination type, it copies complete code combinations (full Accounting Flexfields) from designated fields to destination Accounting Flexfields. The default Oracle Purchasing processes do not build individual flexfield segments.
 

For example, to populate the Accrual account for distributions with an Expense destination type, the Account Generator locates the Expense AP Accrual Account that you specify in the Purchasing Options window as part of your application setup, and copies it into the Accrual Account Flexfield in your document.

Default Account Generator Account Sources

The horizontal axis lists the Oracle products and windows you use to specify the source accounts that the Account Generator references in Oracle Purchasing. The vertical axis lists the possible destination types for each account type the Account Generator constructs. The body of the matrix lists the fields you use to enter the reference accounts.

When more than one option is indicated for a particular account/destination type combination, the Account Generator attempts to locate the primary source account identified on the matrix with a 1. If this reference account is unavailable or not appropriate for the distribution information you provide, the Account Generator tries the source indicated as 2 and so on until it either successfully locates a reference account, or fails.

    Suggestion: Minimize your setup by specifying source accounts at the appropriate level of detail for your business. For example, you can specify the charge account source for Inventory (expense) destination types at the subinventory, item, or organization level. If an organization level account is sufficient for your business needs, it is not necessary to specify item or subinventory accounts.

For Shop Floor destination types, the Account Generator constructs the charge account based on the resource cost element associated with the Outside Processing job or schedule. In this case, the Account Generator selects one of the five possible source accounts; it does not step through a hierarchy of choices as it does for other destination types. Finally, the Account Generator does not construct a budget account for Shop Floor distributions, even if you are using encumbrance. Oracle Purchasing never encumbers outside processing purchases.

    Attention: The default Oracle Purchasing Account Generator processes includes one rule for building Expense destination charge accounts. If you specify an expense account for each of your predefined items, the Account Generator copies this code combination to the Charge Account field of your destination documents. If you are buying one-time or predefined items with no associated expense account, the Account Generator is unable to build a charge account. In this case, you can either manually specify a charge account in your document or you can design a custom Account Generator function to build Expense destination charge accounts based on field values like Requestor.

While you cannot edit the accrual, budget, or variance accounts that the Account Generator constructs, you can override or specify the charge account for uncommitted Expense distributions. In this case, you can either edit the charge account that the Account Generator constructs for you, or you can specify a default charge account in the Defaults region of your document. When you specify a default charge account, it always overrides any expense charge account that the Account Generator tries to provide.


 

Purchase Order Defaulting Rules

Purchasing uses a comprehensive defaulting mechanism to provide most required purchase order information and minimize document creation time. For example, when you are entering a standard purchase order and you want only one shipment and distribution for each purchase order line, you do not need to navigate beyond the Lines tabbed region unless you want to change the default information in the shipments and distributions that Purchasing automatically creates.

Note that the Account Generator may be unable to build accounts for a number of reasons related to defaults. For example, if you have entered a one-time item and there is no default account for your user or category. In this case, you must enter distributions in the Distributions window.

Blanket Purchase Agreement

Enter the header line and price break information and save it.
Agrrement TAB

As per the above price break, when a relase of quantity 100 is made the supplier gives a discount of 10%. Similraly when the release quantity is more than 300 quantity that shipment gets a discount of 20%.
If the cumulative pricing is enabled then when we make a release of
first 50 quantities the discount is zero
next 40 quantities the discount is zero
next 40 quantities the discount is 10%
next 280 quantities the discount is 20%
but if cumulative pricing is not enabled then the discounts for above cases would be
first 50 quantities the discount is zero
next 40 quantities the discount is zero
next 40 quantities the discount is zero
next 280 quantities the discount is 10%

Global Agreement

Purchase Order Components and Record Structure

Header
Each purchase order has a header that provides the supplier’s name/number and address (through sites), basic ship-to and bill-to addresses (through locations) and a status.

Lines
Goods or services ordered are listed on the Lines region, including quantities, price, need-by date, notes to supplier and price reference information. You can order system items or onetime items (a category and description). Even companies who are not inventory focused can benefit from defining system items to reduce data entry requirements for their staff.

Shipments
Use the Shipments window to specify inventory organizations, ship-to locations and the date you want your supplier to deliver the items on the purchase order line. A purchase order line with a quantity of six items can, for example, have two scheduled shipments on separate dates.

Distributions
Use the purchase order Distributions window to enter distribution information for purchase order shipments or to view distributions that Purchasing has automatically created for you.
You can enter multiple distributions per shipment line. You can also view the on-line requisitions included on the purchase order or enter information about paper requisitions in this window.

Defining Units of Measure

Units of measure are used by a variety of functions and transactions to express the quantity of items.

• Defining units of measure is the second step in unit of measure management.
• The values defined in the Units of Measure window provide the list of values available in unit of measure fields in other windows.
• Units of measure are not organization-specific.

Primary Unit of Measure
Theprimary unit of measure is the stocking unit of measure for an item in a particular organization. The primary unit of measure is an item attribute that you specify when defining each item.

Prerequisites
You must define at least one unit of measure class.

Enter UOM from UOM Class FORM

After defining the UOM class click on Uint of measure button to enter a new UOM.
Enter the UOM namd and short name. Save the form
 

Define a UOM in UOM form
Navigate to the Units of Measure window.

1. Enter a unique name for the unit of measure.
2. Enter a unique abbreviation for the unit of measure with a maximum length of three characters.
For example, EA for each or HRS for hours.
3. Enter a unit of measure class.
4. Indicate if this is the base unit of measure for the unit of measure class.

To delete a unit of measure:
1. You can delete existing units of measure that are not base units of measure if no standard or item specific conversions are defined.

To make a unit of measure inactive:
1. Enter the date on which the unit of measure becomes inactive. As of this date, you can no longer assign standard or item-specific conversions to the unit of measure.

To change Base UOM:
Its not possible to change the base UOM from one UOM to another UOM
 

Entering Purchase Order Details Information

Use the Terms and Conditions window to enter terms, conditions, and control information for purchase orders. Discussed in this section are:

• Purchase Order Terms
• Agreement Controls
• Contract Terms
• Encumbrance Controls

• the Effective start date for the purchase order
• the Effective expiration date for the purchase orde
• the Amount Limit (for the total of all releases) and the Minimum Release Amount that can be released against this purchase order. For blanket and contract purchase agreements, the Amount Limit must be equal to or greater than the Amount Agreed.

Purchase Order Shipments

Use the Shipments window to enter multiple shipments for standard and planned purchase order lines and to edit shipments that Purchasing automatically created for you. A purchase order shipment specifies the quantity, ship-to organization and
location, date you want your supplier to deliver the items on a purchase order line, and country of origin for the items. When you save your work, Purchasing creates distributions if sufficient valid default information is available and if there are no
existing distributions.

 

• If you have match option set to 'Purchase Order' in PO, then you can create an invoice against this supplier and match only at 'PO' level in AP. Which means, in AP system will not allow you to match this invoice at 'PO receipt' level.
• If you have match option set to 'Receipt' in PO, then you can create an invoice against this supplier and match only at 'Receipt' level in AP. Which means, in AP system will not allow you to match this invoice at 'PO' evel.                             

Entering Purchase Order Distributions

Use the purchase order Distributions window to enter distribution information for purchase order shipments or to view distributions that Purchasing has automatically created for you. You can enter multiple distributions per shipment line. You can also enter information about paper requisitions in this window.

Navigate to the Distributions window by selecting the Distributions button in the Shipments window.

Approval Assignments

Use the Assign Approval Groups window to associate approval groups with a specific job or position and a document type including: Purchase Requisition, Internal Requisition, Standard Purchase Order, Planned Purchase Order, Blanket Purchase Agreement, Contract Purchase Agreement, Scheduled Release, and Blanket Release. You can associate multiple approval groups with a single document type/job or position combination. Whenever you associate two or more approval groups with a single document type/job or position combination, Purchasing uses the most restrictive rule to evaluate authorization limits.

Attention: While individual approval groups do not require an enabling Account Range Include rule, every document type for each job/position must be associated with at least one approval group with this characteristic. Otherwise, employees in the associated job or position will be unable to approve this document type.

If no approval groups are associated with a particular document type for a given job or position, then employees assigned to this job or position will be unable to approve documents of this type.

Choosing a Set of Books

Your set of books defines the account structure, accounting calendar, and functional currency your organization uses to record transactions in Payables. If you are not using the Multiple Organization support feature, you can choose one primary set of books for each installation of Payables. You can choose one primary set of books for each installation of Payables. You can choose a secondary set of books in the Accounting Methods region of the Payables Options window if you are keeping both an accrual and cash set of books.

Your system administrator associates sets of books with one or more responsibilities. Your responsibility determines with which set of books you are working. You have the option of setting up multiple organizations within one installation of Payables. Your system administrator associates a responsibility with a particular organization and set of books. The name of your set of books appears on all reports you generate in Payables.

If you use the Multiple Reporting Currencies feature, read the Multiple Reporting Currencies in Oracle Applications manual for information on your sets of books.

Attention: You cannot change your Set of Books selection in this window after you save it.

To choose your primary set of books:

Requisition Templates

Use the Requisition Templates window to define requisition templates.
These templates automate requisitioning of commonly ordered items like office supplies. To create a requisition for office supplies, requestors in your organization simply use your template and enter the quantity of each item they want to order.

To create a template, you can specify the items individually or you can reference an existing requisition or purchase order. If you reference an existing document, Purchasing adds all lines on the document to the template. You can reference multiple documents to add all their lines to the same template.

After you define a template, you can reference the template in the Supplier Item Catalog. When you do so, Purchasing displays all template lines that are valid for the destination organization, and you can use any of these lines on your requisition. You can create requisitions with this template as long as the requisition creation date is before the template inactive date.

To define requisition templates:
Navigate to the Requisition Templates window by selecting Requisition Templates from the menu.

PO Communication to Suppliers

In a business climate that is more global and electronic everyday, enterprises are being asked to produce procurement documents in a variety of different forms. This section discusses the setup steps which define your supplier’s preferred communication method. Oracle Purchasing supports the following methods of communicating purchase orders:

• Print
• Facsimile (fax)
• Electronic mail (e–mail)
• Extensible Markup Language (XML)
• Electronic Data Interchange (EDI)

Centralized Procurement Setup

Oracle Purchasing provides features to enable consolidation of similar functions across all of your global business units. This consolidation is typically referred to as centralized procurement or sourcing service centers. The goal of which is to create autonomous procurement business units within the enterprise.

Centralized Procurement Accounting
In a centralized procurement environment you may create a purchase order in one operating unit, but require shipment to a different operating unit. Accounts are provided to ensure proper financial reconciliation between the procuring business unit and the receiving business unit using intercompany invoicing. This accounting requires that a transaction flow is defined between the two organizations.

Global Agreements
Global agreements are agreements (blanket purchase agreements or contract purchase agreements) with a supplier that can be shared between business units. Global agreements empower the centralized service unit to negotiate on behalf of some or all other business units and store the negotiation outcome in a single document. This single document can then be used for automatic sourcing of requisition demand from any enabled business units.

Centralized Procurement Automatic Sourcing
Sourcing rules, sourcing rule assignments and approved supplier lists (global ASL) are created in the owning business unit. The global agreements referenced by automatic sourcing are then available for execution in all business units enabled by the buyer. Complete process automation is achieved by defining sourcing rule assignments for the global agreements in the executing business unit.

Centralized Procurement Step by Step
Define Transaction Flows
Transaction flows define the procurement relationship between different operating units. The details of this relationship define how the expenses are transferred from one business unit to the other (could be a different set of books).
Defining a transaction flow consists of these steps:

• Define transaction flow
• Define intermediate nodes
• Define intercompany relationship

• To take full advantage of all centralized procurement features, set the profile HR: Cross Business Groups to Yes at the site level.
• Define a supplier site for the supplier in each operating unit that will be defined as a purchasing organization for the global agreement. The supplier site names do not need to be the same as the supplier site name in the global agreement.
• Create a new blanket purchase agreement or contract purchase agreement with the Global checkbox enabled.
• Enable the the global agreement (select the purchasing organization and purchasing site) for those operating units that are authorized to order referencing the global agreement.
• Define sourcing rule assignments for the global agreement in the executing operating unit.

Expense Charge Account Rules

When determining the default charge account for a line with a destination type of expense, the account generator may reference the charge account defined on the employee record. If the account generator references the employee record, then the Expense Charge Account Rules enable you to override one or multiple segments of that default account based on the item category. This ability to override does not interfere with the action of the account generator, but simply replaces those segments you configure after the account generator has created a charge account.

Note: This feature is available for lines containing one–time or inventory items as long as their destination type is expense.

The account segments defined in this window can only be used when the following conditions are true:

• Destination type is expense
• Purchase order was not created from a requisition
• Account was not set in preferences
• Account was not sucessfully derived from project–based rules
• Account was not sucessfully derived from the item setup

Document Approval Process

Purchasing lets you approve requisitions, standard and planned purchase orders, blanket and contract purchase agreements, and releases using a common process. When you complete your documents and are ready to initiate the approval process, select the Approve button in the document entry window to open the Approve Document window.

More on Approval

Approval Workflow
Purchasing uses Oracle Workflow technology to handle the entire approval process. When you take an approval action in the Approve Document window or the notification, or through the Web or e–mail, you are ”submitting” the approval action to Workflow. Workflow works in the background, using the approval controls and hierarchies you’ve defined to route documents for approval. Because Workflow handles your approval process in the background, you can use Oracle Workflow Builder’s easy interface to modify your approval process.

Approved Documents and Supply
A Pre–Approved document does not show up as supply. A Pre–Approved document is one that meets the following conditions:

• A person with the final authority to approve the document approves it, but then forwards it to someone else for additional approval, thus changing its status to Pre–Approved.
• Your organization uses encumbrance (reserves funds for documents), and the document is authorized for approval but funds have not yet been reserved for it. Even if someone with sufficient approval authority approves the document, its status may still be Pre–Approved if funds were not able to be reserved at the time of approval. Once funds are reserved for the approved document, the document changes its status to Approved.

• Assign the offline approver a logon user name.
• Use the notification handling feature to forward the offline approver’s documents to a proxy approver—someone who canlog on to Oracle Applications and approve the document on the offline approver’s behalf.

Document Control Overview

Purchasing allows you to control the status of your requisitions, planned and standard purchase orders, blanket and contract purchase agreements, and releases during the document life cycle. Purchasing provides you with the features you need to satisfy the following basic needs. You should be able to:

• Delete unapproved documents or unapproved lines, shipments, and distributions that you add to previously approved documents
• Terminate existing commitments to buy from suppliers by fully or partially cancelling your documents
• Control how Purchasing automatically closes documents for receiving and invoicing activity
• Indicate that no further internal activity is expected or allowed on completed orders by final closing them
• Freeze or unfreeze documents to control whether modifications are allowed
• Place documents on hold to prevent printing, receiving, invoicing, and approval until the hold is removed
• Firm purchase orders to prevent Oracle Master Scheduling/MRP and Supply Chain Planning from suggesting reschedules in, cancellations, or new planned purchase orders within the time fence created by your firm date

Entering Requisition

Use the Requisitions window to:

• Enter internal and purchase requisitions. Your approval and security setup options determine which types of requisitions you can enter.
• Take approval actions on individual requisitions online.
• Edit requisitions. Your approval and security setup options determine which requisitions you can edit.

Entering Requisition Lines

Use the Items tabbed region in the Requisitions window to enter requisition line information.
You can choose a predefined item or you can an enter an item without an item number.

To enter requisition line information:
Navigate to the Items tabbed region in the Requisitions window.

Entering Requisition Distributions

Use the Distributions window to enter requisition distributions or to view distributions that Purchasing has automatically created for you. You can charge the cost of this requisition line to multiple Accounting Flexfields or update the default values you provided in the Requisition Preferences window.

Note: If the line source type is Inventory, you cannot approve the requisition if you enter more than one distribution line.

To enter requisition distributions

Entering Requisition Preferences

Use the Requisition Preferences window to enter requisition line defaults (including currency, destination, project, and sourcing default information). These defaults are applicable during this user session to all new requisition lines you create after you set the defaults until you exit Purchasing. You can override these defaults for specific lines.

To enter main preferences:

Using Requisition Templates

From the Requisitions window, use the Supplier Item Catalog window and Requisition Templates to create requisitions more easily.
Please check set up @
http://www.oracleug.com/user-guide/purchasing-overview/requisition-templates

To use requisition templates to enter requisitions:

Demand for Internal Requisitions

Demand for inventory requests can come from several sources. The primary sources are:

• Online user’s request for stock items out of inventory
• Inventory Replenishment Requests
• Oracle Master Scheduling/MRP and Supply Chain Planning generated requisitions
• External system’s requests

• Min–Max Planning
• Reorder Point Planning
• Subinventory Replenishments for Replenishment Counts
• Kanban Replenishments

Internal Requisition Approvals

After you create an internal requisition, you can optionally require approval. For on–line requests, you can set up approval rules that are specific for internal requisitions, or you can share the same rules you use for purchase requisitions. If you do not require additional approval steps, you can set up rules so that you can always complete and approve the document in the Requisitions window.

Min–max planning, Reorder Point planning, and MRP generated requisitions are loaded as approved requisitions through the
Requisitions Open Interface. If you set the Inventory Profile INV: RC Requisition Approval to Unapproved, you can optionally load Subinventory Replenishment requisitions as unapproved and use the document approval functionality in Purchasing. This profile option affects only Subinventory Replenishment requisitions.

An internal requisition corresponding to a kanban card in Oracle Inventory enters Purchasing through Requisition Import with a status of Approved. (If encumbrance/budgetary control is on, Purchasing sets the status to Pre–Approved.) As soon as the internal requisition is approved, Inventory automatically receives a status for the kanban card of In Process.

Requisition supply is created for the destination organization as soon as the requisition is approved. If you create approved requisitions through Requisition Import, supply is created at the time the requisition is created. Master Scheduling/MRP and Inventory planning get complete visibility to the incoming internal requisition supply so the planning processes do not create additional reorders for items that you have already requested.

More on Purchasing

Entering and Viewing Purchase Order Acceptances
Use the Acceptances window to view and enter purchase order acceptances from your suppliers. The original copy of the purchase order you send to the supplier is a legal offer to buy. A binding purchase contract does not exist until the supplier accepts your offer either by performing the contract or formally accepting the offer by returning an acceptance document to you.

You indicate on your standard purchase orders, purchase agreements, and releases whether you require your suppliers to accept your orders by a specific date. Purchasing notifies you in the Notifications Summary window of the orders for which the suppliers have not responded by the acceptance due date.

To view acceptances
Navigate to the Acceptances window by selecting Acceptances from the Tools menu in the Purchase Orders, Releases, and
Purchase Order Summary windows when you do not have a purchase order open. Purchasing displays the Acceptances
window with all previously accepted purchase orders for review.

To enter acceptances

Entering Purchase Order Notification Controls

Use the Notification Controls window to enter notification controls for planned purchase orders, contract purchase agreements, and blanket purchase agreements. For these documents, you can establish expiration and release control notification conditions and specify the number of days before the condition is met that you want to be notified. When the notification conditions are met, Purchasing sends you an alert, using Oracle Alert (or e–mail).

To enter notification controls

Amount Agreed & Minimu Release

Entering Releases

Use the Releases window to enter, edit, and approve releases against blanket purchase agreements or planned purchase orders.

 

Sourcing, RFQs, and Quotations

Purchasing provides you with request for quotation (RFQ), and quotation features to handle your sourcing needs. You can create an RFQ from requisitions, match supplier quotations to your RFQ, and automatically copy quotation information to purchase orders.

• Purchasing provides complete reporting to control your requests for quotations and evaluate supplier responses.
• Identify requisitions that require supplier quotations and automatically create a request for quotation.
• Create a request for quotation with or without approved requisitions so that you can plan ahead for your future procurement requirements.
• Record supplier quotations from a catalog, telephone conversation, or response from your request for quotation. You can also receive quotations electronically.
• Review, analyze, and approve supplier quotations that you want available to reference on purchase orders and requisitions. You should be able to evaluate your suppliers based on quotation information.
• Receive automatic notification when a quotation or request for quotation approaches expiration.
• Review quotation information on–line when creating purchase orders or requisitions and copy specific quotation information to a purchase order or requisition.
• Identify a supplier that you want to use only for receiving RFQs and quotations. You can later be able to access purchase history to help you decide if the quotations are acceptable.
• Review the purchase history for a specific item. You can identify the suppliers you used in the past, quantities you ordered, and pricing information. You can match this information to specific purchase orders.
• Simplify the sourcing of commonly purchased items. You can define requisition templates for your commonly purchased items. Requestors can use these requisitions templates to create simple, pre–sourced requisitions.
• Source the items for which you negotiated purchase agreements automatically. If you created sourcing rules and Approved Supplier List entries for the items, supplier information is entered automatically in the Requisitions window when you create requisitions. You can also place supplier information for items onto blanket purchase order releases.
• Specify planning constraints, such as lead time, minimum order quantity, or fixed lot multiples, for each supplier site for an item so that if a supplier cannot currently meet your demand, Supply Chain Planning automatically uses another supplier that you specify.
• Electronically Received Catalog Information : You can receive price/sales catalog information electronically from
  your supplier through the Purchasing Documents Open Interface. The information is imported directly as blanket purchase agreement lines or catalog quotations.
• AutoCreating RFQ and Quotation Information : You can AutoCreate RFQs directly from requisitions. You can also
  Copy quotations directly from RFQs to facilitate recording responses from your suppliers. (If you receive catalog information from your supplier electronically, that information is sent automatically in the form of a catalog quotation)
• Supplier Lists : Purchasing lets you create supplier lists so that you can predefine groups of suppliers to whom you want to send RFQs. You can establish supplier lists according to criteria you define (item, manufacturing category, geographic location, or other) and you can combine supplier lists to produce many copies of your RFQ automatically.
• Purchasing History : Purchasing lets you review your purchase price history information to help you source your items better. You can either review all historical prices for a particular item or the last prices you paid for a specific item by quantity. You can review the detailed information of the purchase order corresponding to this last price.
• Automatic Sourcing : Automatic sourcing automatically defaults sourcing information onto the requisitions, blanket purchase orders, or quotations you create. You can easily assign any item with an item number to a specific blanket
  purchase agreement or quotation you created. Purchasing automatically assigns the name of the supplier for the blanket purchase order and quotation to any requisition for this item. (If you receive catalog information from your supplier electronically—and you specified sourcing rules to be sent electronically also—then the sourcing rule and Approved Supplier List entry for this supplier is entered in your system automatically.)

Basics of RFQs and Quotations

A request for quotation (RFQ) is sent to a supplier to request pricing and other information for an item or items. A quotation is the supplier’s response to that RFQ. Some examples of how you send an RFQ to a supplier include creating an RFQ in the RFQs window and sending it by facsimile, making a phone call, or using Oracle iSupplierPortal.

One way a supplier can send a quotation, whether or not in response to an RFQ, is through the Purchasing Documents Open Interface. If you don’t receive quotations electronically from your supplier, you can create the quotation manually using the Quotations window, or copy the quotation from an RFQ.

Using Quotation Information on Your Documents
Purchasing lets you use your quotation information when you build purchase orders.

Using Quotation Information for a Purchase Order
When you create a purchase order (manually or from requisitions), you can use the Supplier Item Catalog window to retrieve quotation information. (The Supplier Item Catalog window can include quotations sent to you by your supplier through the Purchasing Documents Open Interface.) Purchasing provides all your approved quotation shipment information for a specific item or manufacturing category. You can copy this quotation shipment to an existing blanket purchase agreement or standard purchase order when you add this item or purchasing category to a purchase order line. You can sort this quotation information according to your needs, using criteria such as price or quantity. You can easily evaluate the source that is best for an item.

After you select the quotation shipment you want to use, Purchasing copies the item unit price, quantity, unit of measure, supplier product number, inspection required status, receipt required status, quotation number, quotation type, and supplier quotation number on your purchase order. Purchasing also copies the quotation item description on your purchase order if you define your items to do so. Purchasing automatically warns you when the terms and conditions of the quotation are different from the terms and conditions of your purchase order. The original purchase order terms and conditions remain unchanged.

Using Partial Quotation Information on a Requisition
When you enter an item or purchasing category on a requisition line, you can use the Supplier Item Catalog window to access quotation shipment information for the item or category. After you select the quotation shipment you want to use, Purchasing automatically copies the item unit price, quantity, unit of measure, supplier product number, supplier name, supplier site, and supplier contact to your requisition line. Purchasing also copies the quotation item description on your
purchase order if you define your items to do so.

Types of Quotations and RFQs
There are three types of quotations and RFQs that come with Purchasing by default:
Bid: Used for a specific, fixed quantity, location, and date. For example, a Bid would be used for a large or expensive piece of equipment that you’ve never ordered before, or for an item that incurs transportation or other special costs. You cannot specify price breaks for a Bid quotation or RFQ.
Standard: Used for items you’ll need only once or not very often, but not necessarily for a specific, fixed quantity, location, and date. For example, you could use a Catalog quotation or RFQ for office supplies, but use a Standard quotation or RFQ for a special type of pen you don’t order very often. A Standard quotation or RFQ also includes price breaks at different quantity levels.
Catalog: Used for high–volume items or items for which your supplier sends you information regularly. A Catalog quotation
or RFQ also includes price breaks at different quantity levels.

For all three types, you can define effectivity dates at the header level.
For Catalog and Standard quotations, you can also specify effectivity dates for individual price breaks. (For a Bid, you cannot specify effectivity dates at the shipment level.) You can also define your own RFQ or quotation types using the
Document Types window.

Overview of the Supplier Item Catalog

The Supplier Item Catalog provides a simple mechanism for locating items and their source information for the purpose of creating purchase order and requisition lines. You can open the catalog from an existing requisition or purchase order and add lines to that document. Alternatively, you can open the catalog from the Navigator and search for item information from there.
Search Supplier Item Catalog Window

Receiving Price/Sales Catalog Information Electronically

Your supplier can send you the latest price/sales catalog information and responses to requests for quotation through the Purchasing Documents Open Interface. The Purchasing Documents Open Interface processes catalog data in the Oracle Applications interface tables to ensure that it is valid before importing it into Purchasing.

One way to import catalog data into the Purchasing Documents Open Interface, and finally into Purchasing, is through Electronic Data Interchange (EDI). EDI programs import the catalog information into Purchasing directly as blanket purchase agreement lines or catalog quotations, whichever you choose. You can also choose to have the programs  automatically populate the item master and/or apply sourcing rules to the imported item information. If you import price/sales catalog
information as blanket purchase agreement lines, you can also specify release generation methods. You can import new documents, replace existing documents entirely, or update existing documents.

The catalog information is sent by the supplier in the form of a ”flat  file.” Your supplier can send you flat files with any of three kinds of action codes: Original, Replace, or Update. An Original file is one in which all the catalog information is new to your system. A Replace file replaces already–created blanket purchase agreement lines or catalog quotations with new documents containing new price/sales catalog information. (The Purchasing Documents Open Interface program replaces the old documents by invalidating their effectivity dates; then it creates new documents with the new price/sales catalog information and the old effectivity dates.) An Update file updates existing blanket purchase agreement and catalog quotation lines without replacing the documents entirely. It updates the unit Price, item Description, unit of measure (UOM), Price Breaks, Expiration Date, and the supplier URL descriptive flexfield if you use one.
Note: An Update submission does not update the UOM on an agreement line for which an open release exists. Instead, it
uses the Expiration Date field to expire the line on the agreement, and creates a new line with the updated UOM,
which will be used on future releases.

The Purchasing Documents Open Interface also imports price breaks. In an updated price/sales catalog, if the supplier updates an item’s price, the Purchasing Documents Open Interface deletes the item’s price breaks since they are no longer current with the new price. If the supplier sends new price breaks for an existing line, the current price breaks are deleted and the new price breaks sent by the supplier are created.

The Purchasing Documents Open Interface supports the Oracle e–Commerce Gateway transmissions of the price/sales catalogs (ANSI X12 832 or EDIFACT PRICAT) and responses to RFQs (ANSI X12 843 or EDIFACT QUOTES). For e–Commerce Gateway to distinguish between Original, Replace,  and Update action codes, you need to set up code–conversion categories and values in e–Commerce Gateway.

Other setup includes making sure that default category sets are set up appropriately for both Purchasing and Inventory, setting Purchasing profile options, and allowing updating of the item master if you want to update the item description in the item master as well as on the blanket purchase agreement or quotation. For complete instructions on setup requirements, see the Oracle Manufacturing, Distribution, Sales and Service Open Interfaces Manual.

You can also import standard purchase orders through the Purchasing Documents Open Interface, using your own import program. You cannot update or replace existing standard purchase orders through the Purchasing Documents Open Interface. You must use the Change Order API. 

General Ledger encumbrance accounting

Setups
1.1 Define Reserve for Encumbrance account for each set of books.
When you post encumbrance transactions, General Ledger automatically posts offset amounts to this account.

1.2. Enable Budgetary Control for your set of books to automatically create encumbrance entries from Oracle Purchasing and Oracle Payables.
owever, you need not define budgetary control options for your detail or summary accounts nor must you define budgetary control groups.

2. Open encumbrance years to enter and post encumbrance entries to future periods. Your initial encumbrance year is opened automatically when you open your first period for your set of books. General Ledger uses the last period of your latest open encumbrance year to determine how far to calculate your project-to-date encumbrance balances.

3.1 Define Encumbrance Types
3.2 Define Budget
3.3 Define Budget Organization
3.4 Define Budgetary Control Groups
3.5 Assign Budgetary Control Groups

4. Define financial encumbrance options in Purchasing and Payables in the Financials Options window.

Process
1. Entering Budget
Budget entries can be entered either through the Enter Budget Amounts form or through the Enter Budget Journals form.
Budget journals needs to be posted to GL.

2. Encumbrance Accounting Flow from Purchasing
Requisition Encumbrance
You may enable this option to encumber funds for requisitions. If you enable this option, Purchasing creates journal entries and transfers them to General Ledger to encumber funds for purchase requisitions.

If you enable Use Requisition Encumbrance, you must select an encumbrance type by which you can identify your requisition encumbrance journal entries. Purchasing assigns this encumbrance type to the encumbrance journal entries it creates for purchase requisitions. If you enable Use Requisition Encumbrance, you can indicate whether you want requisition preparer to have the option to reserve funds. If you do not enable this option, only requisition approvers will have the option to reserve funds.

PO Encumbrance
Enable this option to encumber funds for purchase orders, purchase order and receipt matched invoices, and basic invoices (not matched). If you enable this option, Purchasing encumbers funds for purchase orders and Payables encumbers funds for variances during Payables Invoice Validation for purchase order and receipt matched invoices. If you enable this option and enter a non-purchase order matched invoice, Payables will encumber funds for it during Payables Invoice Validation. All Payables encumbrances are reversed when you create accounting entries. If you enable Use Requisition Encumbrance, you must also enable this option.

If you enable Use Purchase Order Encumbrance, select a purchase order encumbrance type by which you can identify your purchase order encumbrance journal entries. Purchasing assigns this encumbrance type to the encumbrance journal entries it creates for purchase requisitions and purchase orders. If you use purchase order encumbrance, select an invoice encumbrance type by which you can identify your invoice encumbrance journal entries. Payables module assigns this encumbrance type to the encumbrance journal entries that it creates. It is recommended that you use an encumbrance type different from the Purchasing encumbrance type so you can identify invoice encumbrances

2.1 Users can enter, approve and reserve Funds for Requisition.
Navigation: Requisitions -> Requisitions.
Create a requisition, reserve and approve the requisition. When approved users can do a funds check in GL and this should be in requisition phase, provided requisition is the type of encumbrance Users have attached at requisition level in Financial options. Reserving the requisition kicks of the funds checker program and encumbrance line gets created in the table GL_BC_PACKETS. The encumbrance journal entries get created when the program – Create Journal Entries is run from GL.
The data in GL_BC_PACKETS table would get deleted, only when the Create Journal Program in GL is run and the journal gets posted.
The Transaction Created can have the following feature
Balance Type         = E (Encumbrance)
Encumbrance Type    = REQ (Requisition)
CCID            = CCID given in Requisition Distribution


2.2 Navigation: Auto Create
Find your requisition, Select the requisition and go to automatic.  Make sure that the supplier information is entered and select create.  This creates the PO. Complete, reserve and approve the PO.  When approved users can do a funds check and this should be in PO phase, assuming PO encumbrance is the type attached at PO level.
No journal entries are created at this stage but similar to the previous step Users can create encumbrance entries by Create Journal Entry program.  While using PO Encumbrance, users cannot change price, quantity, shipment or currency once a PO has been reserved and approved, the only way to deal with such a situation is to cancel the existing PO and create a new one when a PO is cancelled system takes care of adjusting encumbrance.
The encumbrance created on Requisition is relived when the PO encumbrance is created and Funds are reserved for the PO.
NOTE: The important point over here is that if a user creates the PO manually, it can lead to the duplication of reservation of funds for the same transaction.  This is because system treats PO as a separate transaction and the user can end up having double reservation for the same transaction one at requisition level and other at PO level.  Hence it is suggested to use only Auto Create mode to create a PO, while using Encumbrance Accounting.
The Transaction Created can have the following feature:
Balance Type         = E (Encumbrance)
Encumbrance Type    = PO (Purchase Order)
CCID            = CCID given in PO Distribution
    
2.3 Receiving Receipts
On receipt of the goods, the entries are made as follows:
Navigation: Receiving Receipts
Query the PO. Mark as receipt and save. Depending on the routing users may have to deliver it. Once the goods are received system creates Journal entries for the Receiving transaction. At this point PO encumbrance is relieved.  Otherwise, it gets relieved when Users post the invoice from payables to GL in Accrual basis of Accounting.  In case of Cash basis of accounting PO encumbrance gets relieved when Users post payment information from Payables.
The PO encumbrance is getting relieved based on the setup the user has made, depending on whether the period-end or on-line accrual is selected.
If on-line accrual method is selected, the PO encumbrance can be relieved when the goods are received.  In case of period-end accrual, we need run the period-end accrual process.

NOTE: Important reports that can be used to track the encumbrance entries are:
1. Requisition Distribution Detail Report.
2. Purchase Order Distribution Detail Report.
3. Encumbrance Detail Report.

3. Payables
Once the Goods are received and matched against the Purchase Order, the next step is to create an invoice for the Goods received.  Invoice can be created at the following scenarios.
3.1    Enter Unmatched Invoices
Navigation: Invoices -> Entry -> Invoices
This is applicable where no purchase order is created.  For example, where the invoice has to be created for the services rendered (Audit Fees). 
•    There is no separate step to reserve funds in AP unlike in PO.  In AP, Validation process takes care of the funds reservation.
•    If the invoice is created and matched with PO and the amount matched is equals to PO, then the encumbrance type can be reclassified from PO to INV and no additional entries are generated.
•    Payable also creates encumbrance when users successfully approve an invoice having a quantity or price variance with the matched PO.
•    If Users match an invoice to a PO, Payable automatically creates an entry in GL to reverse the PO encumbrance and the Invoice Encumbrance comes into picture
•    Encumbrance Entries are created when an invoice is validated and approved. The actual entries are created when we transfer to GL through Payables Transfer to GL program and imports the journals into GL. This will bring two entries, the Actual and the Invoice encumbrance relief
•    You need to run the Create Journal Entry program to bring in the PO Encumbrance relief and the Invoice encumbrance lines into GL
Select the Account Combination at the header level, as in the Assignments window in the Budget Organization.  If budgetary control group is used, create a budgetary control group with the source Payables and Category as Manual.

3.2    Entering Invoices and Match with Purchase Order
Navigation: Invoices -> Entry -> Invoices
Complete by entering invoice number, date and amount. Navigate to match and in the Find Window the PO number is displayed.  Flag the lines and select Match.  You can flag multiple PO lines to match with the Invoice.
The PO distributions lines can be copied to the Invoice distributions. Users can approve the invoice.  When approved the funds is checked automatically by the system.
The Transaction Created can have the following features:
Balance Type         = E (Encumbrance)
Encumbrance Type    = INV (Invoice)

Entering RFQs

There are three methods of creating an RFQ -  manual entry , auto creating from requisition and by copying a blanket purchase agreement.

Each RFQ consists of header, line, and shipment information. You can send the RFQ to as many suppliers you want and decide how much item information to provide to the suppliers.
Note: Whether or not you send an RFQ, suppliers can send you catalog quotations electronically, through the Purchasing Documents Open Interface.

To Manually enter RFQ:

• Enter the suppliers to which this RFQ will be sent. You can also delete suppliers from the RFQ until you have printed the RFQ for them.
• Review the supplier activity.
•  

 

Entering Quotations

There are three methods of creating an RFQ -  manual entry , by copying a RFQ and receiving catalog quotations electronically from your suppliers through the Purchasing Documents Open Interface.

To manually enter quotation

Supply Base Management

Overview of Automatic Sourcing

Oracle Purchasing allows users to automatically source items from suppliers based on the sourcing rules and purchase agreements. The business needs of sourcing are :

• Automatically default supplier and pricing information onto requisition lines
• Source the item from negotiated purchase agreements

• Source Document              Resulting Document
• Quotation                           Standard purchase order
• Contract purchase order        Standard purchase order
• Local BPA                            Blanket release
• Global BPA                           Standard purchase order
•  

1. MRP: Default Assignment Set => Define with desired Assignment Set
2. PO: Automatic Document Sourcing => Yes
3. PO: Allow Auto-generate Sourcing Rules => CREATE AND UPDATE
4. PO: Allow Autocreation of Oracle Sourcing Documents => Yes

Create ASL And Sourcing Rule From BPA

Setups
1. Check the following profile options

•     PO: Allow Auto-generate Sourcing Rules = CREATE AND UPDATE
•     PO:Allow autocreation of Oracle Sourcing documents= Yes
•     MRP: Default Assignment Set

Defaulting Sourcing Information

For requisitions, if you define a purchase agreement or quotation as the source document for your item, and define and assign sourcing rules, Purchasing provides the following sourcing information for your requisition line: Buyer, Supplier, Site, Contact, Phone, Supplier Item Number, Document Type (Blanket, Contract, or Quotation) Source Document, Source Line Number, and RFQ Required (Yes or No). Oracle Purchasing also defaults the price depending on your pricing configuration. You can later review the sourcing information in the AutoCreate Documents window before placing the requisition line onto
a purchase order.
Sourcing information defaults on a requisition from existing documents in the following order of precedence:

1.  Local blanket purchase agreement
2.  Global blanket purchase agreement
3.  Local contract purchase agreement
4.  Global contract purchase agreement
5.  Quotation

1. Local blanket purchase agreement
2. Global blanket purchase agreement
3. Quotation

• The document is not approved.
• The purchase agreement is frozen or cancelled, or the blanket purchase agreement line is cancelled.
• The document is not active.
• You have copied sourcing information back to the requisition from the Supplier Item Catalog.

Setting Up Automatic Sourcing

Use the Sourcing Rules windows to default a supplier and optionally a supplier site on your requisition or purchase order line. Use the Approved Supplier List or the PO: Automatic Document Sourcing profile if you also want to default source document information from a purchase agreement or quotation on your requisition or purchase order line for an item–supplier combination.

By defining and assigning sourcing rules, Purchasing actively defaults the appropriate supplier onto your document as soon as you enter an item or commodity.
To default the supplier, site, and source document information:
1. Set the profile option PO: Automatic Document Sourcing.
Setting this profile option to Yes means that Purchasing automatically searches for the most current purchase agreement or
quotation for an item–supplier combination, and defaults the information from this document onto a newly created document line. This method is useful if you do not want to maintain the most current source documents in the Approved Supplier List, particularly if you receive these documents regularly from your suppliers through the Purchasing Documents Open Interface. If you set this profile option to Yes, you do not have to specify source documents in the Approved Supplier List.
Note that if an item on a requisition is associated with both a purchase agreement, a global agreement, and a quotation,
Purchasing uses the purchase agreement, then the global agreement, and then the quotation even if the global agreement or quotation were created more recently.

Setting this profile option to No means that Purchasing defaults sourcing information onto a newly created requisition or purchase order line only from those documents you have specified in the Approved Supplier List. This method is useful if you prefer to maintain and update the Approved Supplier List with documents that you choose.
Note: If Oracle Services Procurement is implemented, for services lines the automatic sourcing logic always acts as though this profile is set to Yes. No automatic sourcing is performed for fixed price services.

2. If you set the profile option in the previous step to No , create a source document (a purchase agreement or quotation) and then tie the document to an Approved Supplier List entry.
If you set the profile option in the previous step to Yes, you do not have to perform this step, although you can if you want to. Purchasing still uses the source documents in the Approved Supplier List if they are the most current, and uses documents outside the Approved Supplier List if they are not.
Note: When Use Approved Supplier is checked for an item in the Master Items window, you cannot approve the source document until the supplier is in the Approved Supplier List. Therefore, if Use Approved Supplier is checked for an item, create the Approved Supplier List entry and source document in the following order:
– Create an Approved Supplier List entry (this is the  approved supplier you are enforcing for the item).
– Create and save a source document.
– If the PO: Automatic Document Sourcing profile is No, return to the Approved Supplier List window and tie the
source document to the supplier.

3. Define and assign sourcing rules as described in To default just the supplier and the supplier site below
To default just the supplier and the supplier site
1. Make sure you have satisfied the prerequisites for defining and assigning sourcing rules:

• Define items.
• Create suppliers and supplier sites in the Suppliers window.
• Set the profile options MRP: Sourcing Rule Category Set and MRP: Default Sourcing Assignment Set.

Approved Supplier List

All procurement organizations maintain lists that associate the items and services they buy with the companies who supply them, either formally or informally. Data stored in a controlled, global repository containing relevant details about each ship–from/ship–to/item relationship, is known as an Approved Supplier List (ASL). This repository includes information about all suppliers with business statuses including Approved, Debarred, or New.

• Set approval/certification status at the appropriate level for your business. For example, approve a supplier for a given commodity (e.g. ’Office Supplies’) for expense purchases while approving a specific supplier/site for each production item.
• Approve suppliers (they perform their own manufacturing), distributors (they represent manufacturers), and manufacturers (they manufacture items marketed and sold by distributors).
• Define global or local ASL entries. All organizations should be able to specify their own attributes (information about the supplier/item relationship) even if the supplier/item status is defined as a global record. This enables individual ship–to–organizations to determine, for example, whether they are ready to perform supplier scheduling, their purchasing unit of measure, their default item price, etc.
• Link the primary supplier item number with your internal item number. This designated item will default to Purchase Order and Requisition lines.
• Specify a Review By date indicating a proactive, planned review of the business with a longstanding supplier partner.
• Review ASL information in a flexible inquiry format.
• Define your own approval statuses and associate them with specific business rules.
• Control procurement activity by preventing purchase order approval or supplier schedule confirmation for certain supplier/item combinations.
• Control whether Sourcing Rules must be comprised of approved suppliers.
• Define reference information, including planning constraints such as lead time, for the supplier/item combination.

Defining Approved Supplier Statuses

Defining ASL (Supplier and Item/Commodity Combination)

• Item – Assigns a supplier to a particular item.
• Commodity – Assigns a supplier to a group of items belonging to a category (or commodity). Note: If you have defined your item in the item master with the Must Use Approved Vendor flag set to Yes, Purchasing will use the item level ASL when both item and commodity ASLs exist. If the flag is set to No, both commodity and item ASLs would be considered.

• Direct (Supplier): Company sells their products directly to you If you choose Direct, choose the supplier Name and optionally,the Site.

• Manufacturer: Company manufactures and sells through distributorsIf you choose Manufacturer, choose the Manufacturer Name.
• Distributor: Company sells products made by manufacturers If you choose Distributor, choose the distributor Name and optionally, the Site. You must associate the Distributor with a Manufacturer, meaning you must define a Manufacturer before you define its Distributor.

• Yes – This ASL entry is valid for all inventory organizations in your operating unit.
• No – This ASL entry is local—that is, valid only for the organization you chose in the Organizations window when you first navigated to the Approved Supplier List window.

Defining the Supplier/Item Attributes

Use the Supplier–Item Attributes window to specify additional information for the Approved Supplier List entry, including source document, Supplier Scheduling, and planning constraint information.

• Source Documents: lets you associate specific quotations or purchase agreements with the supplier/item combination.
• Supplier Scheduling: lets you associate Supplier Scheduling information with the supplier/item combination. You can choose this option if you specified an item and a supplier site.
• Capacity Constraints: lets you specify capacity constraints for the supplier/item combination. You can choose this option if you specified an item and a supplier site.
• Inventory: if vendor managed inventory or consigned inventory are enabled, this region lets you specify inventory control information for the supplier/item combination. You can choose this option if you specified an item and a supplier site.

Automatic Offsets in Oracle Purchasing

Receipt Accruals
The default Account Generator configuration in Oracle Purchasing builds a charge, budget, accrual, and variance account for each purchase order, release, and requisition distribution based on the distribution’s Expense, or Inventory, destination type. Oracle Purchasing always builds these accounts using the Account Generator; you cannot disable this feature.

To populate the Accrual account for distributions with an Expense destination type, the Account Generator locates the Expense AP Accrual Account that you specify in Define Purchasing Options as part of your application setup and copies it into the Accrual Account in your document. The Account Generator then overlays the balancing segment of the AP Accrual Account with the balancing segment of the charge account so that your transactions always balance by fund.

Defining Purchase Order Receipt Accruals
You can create balanced offsets for receipt accrual accounts in Oracle Purchasing by customizing the default configuration of the Account Generator to overlay the balancing segment of the AP Accrual Account with the balancing segment of the charge account so that your transactions always balance by balancing segment.

To build Purchase Order Receipt Accrual Accounts:
1. Use the same Chart of Accounts you used to build the purchase order charge accounts by balancing segment, substituting the receipt accrual liability account for the expense account. The Account Generator function is called from the Purchase Orders window to automatically create the receipt accrual liability accounts by balancing segment on each purchase order distribution.
Attention: Use the same balancing segment for the charge account and the receipt accrual account so the receipt transactions will balance by balancing segment.

2. Customize your Account Generator process

IR ISO across Operating unit

Business requirement:
Internal requisition needs to be created in Inv1 in OU1(Destination organization) and the material needs to be procured from Inv1 in OU2(Sourcing Organization).

Setups
1.    Define Location Loc1 and attach Inv1 to it.
      Define Location Loc2 and attach Inv2 to it.

2.    Create a new customer Internal Customer and create sites in both the Operating unit.
Go to OU2 OM responsibility and create a bill to. Attach the Loc1 and organization Inv1 in Internal Tab

Purchase Order Receiving Controls

Use the Receiving Controls window to enter receiving control information for purchase orders and releases. Note that controls you enter here apply to specific purchase orders/releases and override the receiving controls you enter in the Receiving Options window. See: Receiving Controls, Options, and Profiles.

To enter purchase order receiving controls:
Navigate to the Receiving Controls window by clicking Receiving Controls in the Shipments window for purchase orders and in the Releases window for releases.

1. Enter the maximum acceptable number of Days Early and Days Late for receipts.

2. Enter the Action for receipt date control. This field determines how Purchasing handles receipts that are earlier or later than the allowed number of days selected above. Choose one of the following options:
None - Receipts may exceed the allowed days early or late.
Reject - Purchasing does not permit receipts outside the selected number of days early or late.
Warning - Purchasing displays a warning message but permits receipts outside the selected number of days early or late.
Purchasing displays the Last Accept Date, which is the last date when the shipment can be received. This is the promised date plus the number of days late allowed.

3. Enter the maximum acceptable over-receipt Tolerance percent.
Enter the Action for Overreceipt Quantity control. This field determines how Purchasing handles receipts that exceed the quantity received tolerance. Choose one of the following options:
None - Receipts may exceed the selected tolerance.
Reject - Purchasing does not permit receipts that exceed the selected tolerance.
Warning - Purchasing displays a warning message but permits receipts that exceed the selected tolerance.

4. Select Allow Substitute Receipts to indicate that receivers can receive substitute items in place of ordered items. You must define substitute items before you can receive them. See: Defining Item Relationships

5. Enter the default Receipt Routing that you assign goods: Direct Delivery, Inspection Required, or Standard Receipt. You can override this routing during receipt by changing the destination type, if the RCV: Allow Routing Override user profile option is enabled. See: Profile Options in Purchasing.

The Receipt Routing can be set at 5 places:
1) While Creating the Purchase Orders. At shipment level.
2) Item Definition Level.
3) At the Supplier Definition level.
4) Shipping Networks During Inventory Setup.
5) At the Organizational Level. Receipt Options.

Every level overrides the following ones, therefore the Purchase Order level is the highest level and Organization level is the lowest one.

The Receipt Routing Information Provided while Creating the Purchase Order Takes precedence than the other two ways.

There is also a Profile Option :- RCV: Allow Routing Override whose value namely Yes or No indicates whether the receiving routing assigned during requisition or purchase order entry can be overridden at receipt time. This profile is updatable at the site, application, and responsibility, levels.

6. Enter the Enforce Ship To location option to determine whether the receiving location must be the same as the ship-to location. Choose one of the following options:
None - The receiving location may differ from the ship-to location.
Reject - Purchasing does not permit receipts when the receiving location differs from the ship-to location.
Warning - Purchasing displays a warning message but permits receipts when the receiving location differs from the ship-to location.
Select the OK button to apply your entries and return to the original window.

Multiple Distribution of a single shipment

The destination type in receipt form can either be inventory , expense or shopfloor
If a single PO shipment has two differnt distributions then the desitnation type is auto populated as Multiple.
We dont receive the shipment line with type as multiple but we receive the differnt lines associates with that multiple destination type

Procurement Workflows

Purchasing uses Oracle Workflow technology to handle requisition and purchase order approvals, automatic creation of purchase orders and releases, purchase order changes (specifically, any additional approvals those changes require), notifications, and receipt confirmation. Workflow is an underlying technology that automates these procurement activities. Workflow comes with a graphical user interface that enables you to modify
these procurement workflow processes to suit your business needs. Purchasing comes with the following workflows:

1. PO Create Documents workflow for automatically creating purchase orders and releases.

2.1 PO Account Generator workflow for automatically generating accrual, budget, charge, and variance accounts on purchase orders and releases.
2.2 PO Requisition Account Generator workflow for automatically generating accrual, budget, charge, and variance accounts on requisitions.

3.1 PO Requisition Approval workflow for approving requisitions.
3.2 PO Approval workflow for approving purchase orders.

4.1 Change Order workflow for controlling which changes to purchase orders require a manual reapproval and which are automatically reapproved; the change order workflow is really a group of workflow processes contained in the PO Approval workflow.

5.1 PO Confirm Receipts workflow for sending receipt notifications to requesters or buyers notifying them that they should have received their order.
5.2 PO Send Notifications for Purchasing Documents workflow for looking for documents that are incomplete, rejected, or in need of reapproval, and sending notifications to the appropriate people of the document's status.
5.3 PO Catalog Price Tolerance Exceeded Notifications workflow for sending a notification to the buyer when the price/sales catalog information sent through the Purchasing Documents Open Interface includes price increases that exceed a price tolerance that you set.

6.1 Procurement Processes workflow for guiding you through procurement processes by launching the appropriate windows in Purchasing.
6.2 PO Approval Error workflow for troubleshooting errors that occur when using the PO Approval workflow.

Workflow Processes for Approving Change Orders

Whenever you make a change to a document that causes its status to change to Requires Reapproval, that document is routed through the change order workflow. The Change Order workflow uses the same reapproval rules already defined in Purchasing.

With the change order workflow, Purchasing lets you define what changes to purchase orders or releases-for example, to amounts, suppliers, or dates-require manual reapproval and which are automatically reapproved. If you modify the change order workflow then you can allow certain changes to bypass full (manual) reapproval. All reapproved documents, either fully or automatically reapproved, result in the document revision number's being incremented.

All of the workflow processes and functions relating to change orders can be found within the PO Approval workflow.
The change order workflow begins when all of the following is true:

1. Changes to a purchase order cause its Status to change to 'Requires Reapproval.'
2. The document revision number of the purchase order increases.
3. You select Submit for Approval (and then choose OK) in the Approve.

Purchase Document Change Order

In Previous versions of Oracle Applications, including Release 11.0.3 and all of the 11.5.x Releases, there does not exist a user friendly method for controlling if modified Purchasing Documents (Change Orders) needed full reapproval or not. For example, if the business rules at a company are that if a Purchase Order has a total amount change that is within 5% of the original price, they would not require complete reapproval of the Purchase Order, and once that change is made and the document resubmitted, it should be automatically set back to Approved status.

NOTE:  A prerequisite to using these Tolerances is that the Archive method must be set to Archive on Approve.  This is setup via the Document Types page and the navigation from the Purchasing responsibility is Setup > Purchasing > Document Types.   


This activity removes the Reminder Notification issued when the PO/Release was first created,  rejected or modified after it had been approved.

Change Order Reapproval Rules in Release 12

In Previous versions of Oracle Applications, including Release 11.0.3 and all of the 11.5.x Releases, there does not exist a user friendly method for controlling if modified Purchasing Documents (Change Orders) needed full reapproval or not. For example, if the business rules at a company are that if a Purchase Order has a total amount change that is within 5% of the original price, they would not require complete reapproval of the Purchase Order, and once that change is made and the document resubmitted, it should be automatically set back to Approved status.

NOTE:  A prerequisite to using these Tolerances is that the Archive method must be set to Archive on Approve.  This is setup via the Document Types page and the navigation from the Purchasing responsibility is Setup > Purchasing > Document Types.  

Below Flow Document displays the business flow : In previous versions, some fields (workflow attributes) existed in the PO Approval Workflow file that would allow a Workflow Administrator and a functional person to work together to setup tolerances.

An example (and other attributes exist for this as well, this is just one example) of what this looks like in Release 11.5.10 is with the attribute named "Change Order Header Purchase Order Total Tolerance" with description "If the purchase order total is changed less than the tolerance percentage, the document will be automatically reapproved.":

By adjusting the value of the Value field, that tolerance would be used for evaluating if the Purchase Order needed to be fully reapproved or if the Purchase Order needed to be routed through the complete approval process again.

In Release 12, a new web form has been introduced to make setting these tolerances much easier to use. This new feature is helpful because :

    1) It provides a more user friendly User Interface for setting these attributes

    2) It is Available within the Purchasing responsibility so that it is no longer required to engage someone that has access to the Workflow Builder Program (a client side software program).

    3) The attributes that control the reapproval are now operating unit specific (this was previously not the case in the prior versions).

    4) The Change Order Tolerances Page is split into 3 sections for :

    -Auto-Approval Tolerances for Releases
    -Auto-Approval Tolerances for Agreements
    -Auto-Approval Tolerances for Orders



Example
Looking at the above screenshot in the Orders section, the following example can help explain how the fields in this page work.

1) Settings:
-PO Amount is set to 10.  
-Line Amount is set to 10
-Line Quantity is set to 10

2) Lets assume a PO has been created that has two lines.  Line 1 has a quantity of 30 and a price of 100 per each quantity.  Line 2 has a quanity of 20 and a price of 400 per each quantity.   This means the Line 1 Amount = 3000 and the Line 2 Amount = 8000.   The PO Amount = 11000.

3) Now the user changes Line 1 by changing the Quantity from 30 to 31.  She then changes Line 2 and changes the Quantity from 20 to 21.   Since both of these changes at the Line Level are less than 10%  (the line 1 change is approximately 3.33% increase and the line 2 change is a 5% increase) these changes are below the Tolerances that are setup.   The PO Amount change is a change from 11000 to 11500.  This change is also less than 10% (approximately a 4.5% increase).   Since all of these changes are below 10% and within tolerance, the PO will not be required for full reapproval.  This means that if the approver does not have approval authority they will be able to approve the PO without the PO being forwarded to their next approver.  If any of the changes above were above the 10% tolerance then full reapproval would be required.

Returns & Debit Memo

Purchasing allows you to perform returns to suppliers and returns to customers in the Receiving Returns window. Use the Receiving Returns window to return delivered items to receiving and to return received or delivered externally sourced items to the supplier if the purchase order has
neither been cancelled nor final closed. If the Quality module is installed, you can enter quality information.

Use the Receiving Returns window to return items back to a customer. For example, a
customer returns to your company a part that does not work properly. You receive and fix the part, then return the part to the customer.

• You cannot enter returns for internal shipments.
• RMAs cannot be returned to the customer if the material has been delivered to Inventory.
• You can return to the supplier or customer unordered receipts that have not been matched

To return items to receiving, enter the return quantity in the Receiving Returns window. If you originally performed a direct receipt, you must specify a Return To receiving location. Otherwise, Purchasing routes all returned items to the receiving location from which you delivered them. For Inventory (but not Expense or Shop Floor) deliveries, you can update the Return From subinventory. You can also optionally specify additional return information such as Reason Code and RMA number (the number your supplier issues to you to track your return to the supplier).

To return items to the supplier or customer, enter the return quantity in the Receiving Returns window. Purchasing provides the source supplier or customer for the items.
For Inventory (but not Expense or Shop Floor) deliveries, you can update the Return From subinventory. You can also optionally specify additional return information such as Reason Code and RMA number (the number your supplier issues to you to track your return to the supplier). When you return items to the supplier or customer, Purchasing creates both a Return To Receiving and a Return To Supplier transaction.

Purchasing also reopens the associated purchase order for the return quantity by reducing the original receipt quantity. For customer returns, if you return the item back to the customer, Purchasing updates the RMA to reflect the returned quantity.

You can automatically generate debit memos for Return To Supplier transactions once an invoice has been created. When you create the return make sure the Create Debit Memo option is selected. To enable this functionality, enable the supplier site as a Pay Site (or indicate an Alternate Pay Site) and select Create Debit Memo from RTS Transaction in the Supplier Sites window

To To auto create debit memo from RTS, enable the supplier site as a Pay Site (or indicate an Alternate Pay Site) and select Create Debit Memo from RTS Transaction in the Supplier Sites window.When you create the return, make sure the Create Debit Memo Option is selected in the Returns window. Once you enable this functionality, a debit memo is created for each return line you enter in the Returns
window.

• The debit memo number contains the original receipt number. Self-Biiling Invoice numbering affects debit memos. 
• The debit memo is generated by the system with the number (PO receipt number – Sequence). The description of the debit memo is always ‘’System Generated by 'Return to Supplier' Transaction’’. You don’t need to run any program (standard/Interface) for this process.
• The debit memo is dated with the return transaction date. If this date does not fall within an open period in Oracle Payables, the date defaults to the first open date available in Payables.
• The payment schedule on the debit memo is based on the purchase order payment terms (in the Terms and Conditions window) and the invoice terms defined in Payables.
• The debit memo is calculated by multiplying the returned quantity by the purchase order item unit price. If the purchase order is in a foreign currency, and you perform invoice matching to receipts, Purchasing uses the currency conversion rate at the time of receipt to calculate the unit price.
• The debit memo does not include tax and freight charges. 
• If the unit of measure (UOM) on the return in the Returns window differs from the purchase order UOM, Purchasing restates the return quantity on the debit memo in terms of the purchase order UOM
• If an invoice has not yet been created for the receiving transaction or if Payment on Receipt already accounted for the return using the Aging Period functionality, a debit memo will not be created. Whenever a debit memo cannot be created, you will receive a notification in the Notifications Summary window.

PO, Supplier and Inventory Item

Select pha.segment1 "PO_NUMBER",pla.line_num,plla.shipment_num, pv.segment1 "Oracle_Supplier_number", msib.segment1 "item_number",pla.item_revision, pla.item_description, NULL as "Delivery_date", NULL as "Blank Column", pla.unit_price, pha.rate,plla.Quantity_received,plla.Quantity_rejected, (pla.unit_price*pla.Quantity) as "Line_Amount", NULL as "ITEM_COST", NULL as "Amount", pla.VENDOR_PRODUCT_NUM from apps. PO_HEADERS_ALL pha, apps. PO_VENDORS pv, apps. PO_VENDOR_SITES_ALL pvsa, apps. PO_LINES_ALL pla, apps. MTL_SYSTEM_ITEMS_B msib, apps. PO_LINE_LOCATIONS_ALL plla where pha.org_id='xxxx' AND pha.org_id=pvsa.org_id AND pv.vendor_id=pha.vendor_id AND pvsa.vendor_id=pv.vendor_id AND pha.po_header_id=pla.po_header_id(+) --AND pha.po_header_id=plla.po_header_id AND plla.po_line_id(+)=pla.po_line_id --AND msib.organization_id='xxxx' AND pla.item_id=msib.inventory_item_id(+) Order by pha.segment1