What is Oracle Purchasing?

Oracle Purchasing is a comprehensive procurement solution designed to:

• Help purchasing professionals reduce administration costs.
• Process requisitions, purchase orders, requests for quotation, and receipts quickly and efficiently.
• Enable you to focus on:
  o Value Analysis
  o Development of strategic supplier relationships
  o Management of the procurement process

Oracle Purchasing satisfies the following business needs:

• Replaces paper processing with online requisition generation, purchase-order creation, and document approval.
• Regulates document access, controls modification activity and approval, and is based on organizational signature and security policies.
• Minimizes data entry time with item-saving templates.
• Controls purchasing activity and enables accurate,automatic pricing using approved suppliers and supplier lists.
• Consolidates purchase requirements from multiple warehouses, plants or locations.
• Enables negotiating from a position of strength based on easy access to purchase volume statistics and supplier performance reports.
• Facilitates communication between requesters, buyers, receiving staff, and accounts payable staff using online enquiries, attachments and notes.
• Provides related functions, such as marketing, finance, master scheduling, inventory management, production, cost accounting, and customer order entry with access to
  purchasing information.
• Manages historical purchasing data.

What is in Oracle Procurement solution suite?

From the oracle there are 4 different products , that helps in fulfilling complete business requirement as discussed above, these are mainly:

1. Internet Procurement (formerly Self-Service Purchasing) :A web-shopping solution for all employees that automates finding and requisitioning goods and services using self-guiding on-line catalogs coupled with efficient content management. Industry standard XML interfaces allow integration to customers’ existing Oracle, non-Oracle or legacy financial systems.

2. Purchasing Intelligence :a web-enabled analysis tool which provides access to enterprise-wide procurement information, along with the ability to perform ongoing analysis of sourcing decisions, contract compliance, and supplier performance .

3. Internet Supplier Portal, a self-service solution giving trading partners internet access to purchasing, receiving and payment information, as well as providing suppliers the capability to easily process their own transactions·extending process efficiencies across the entire supply chain.

4. Purchasing, which streamlines order planning and management for purchasing professionals.

Apart from these four basic products , these are also used as advance version of purchasing solutions:

• Oracle Sourcing is the enterprise application that drives more and better sourcing through online collaboration and negotiation.
• Oracle Procurement Contracts is used for createing and enforces better purchasing contracts.
• Oracle Daily Business Intelligence for Procurement is used for the spend-analysis application that allows buyers to spot savings opportunities immediately.
• Quality

More information can be found at :

• http://www.oracle.com/applications/procurement/Purchasing-data-sheet.pdf
• Oracle Datasheet

How many reports options available in Oracle Purchasing(PO) to access purchase order information.

They are 15-16 reports provide the access PO information in reporting format.Lets summarize some of them, these listing are based on the availability as per Oracle 11i10.2.

1. Purchase Order Detail Report

This report can be used to review all, specific standard, or planned purchase orders. This is used for review the open purchase orders to
determine how much you still have to receive and how much your supplier has already billed you.

2. Printed Change Orders (Landscape) Report
This report is used to print changed purchase orders in landscape format. Oracle Purchase provides a default format for the preprinted form.

3.Printed Change Orders (Portrait) Report
This report can be used to provides the same information as the landscape version, but printed in portrait format.

4.Printed Purchase Orders (Landscape Report)
This report can be used to print purchase orders in landscape format.Oracle Purchase provides a default format for the preprinted form.

5.Printed Purchase Orders (Portrait) Report
This report contains the same information as the landscape version, but is printed in portrait format.

6.Blanket and Planned PO Status Report
This report can be used to review purchase order transactions for blanket purchase agreements and planned purchase orders. Information will print for releases existing against the orders. If no release exists, only the purchase order header information is printed.

7.Contract Status Report
This review the status of your contract and list purchase order information regarding each contract using this report.

8.Purchase Agreement Audit Report
This report is used to review purchase order transactions for items normally required to buy using blanket purchase agreements. Oracle Purchase shows you when you purchased items using a standard purchase order that you could have purchased using a blanket purchase agreement.

9.Purchase Order and Releases Detail Report
This report can be used to review detail information for your blanket purchase agreements and planned purchase orders. The quantity ordered, receive and billed and the quantity due to be received are displayed so you can monitor the status Purchase Order Commitment by Period Report

10.Open Purchase Orders Report (by Buyer)
This report is used to review all or specific open purchase orders for specific buyers.

11.Open Purchase Order Report (by Cost Centre)
This report can be used to review all or specific open purchase orders relating to order charged to one or more cost centre suing this report.

12.Purchasing Activity Register Report
This report can be used to review purchase order monetary activity carried out for a time interval, such as a day or month.

13.Purchase Order Distribution Detail Report
This report can be used to review account distribution for a purchase order.

14.Purchase Summary Report by Category
This report can used to review the number of orders you place with vendors for a given category of item.

15.Cancelled Purchase Orders Report
This is used to review cancelled purchase orders.

16. Standard Notes Listing
This is used to review standard notes.

Here are the comparison of different purchase orders. The details of the different types can be discussed in my previous post.

The setting up of approval hierarchy for PO requires few mandatory setup , which start with employee /Buyer information.These are the following steps required.

• Define the employee and his/her superiors
• Define the positions for the employee and the superiors

N –> Setup –> Personnel –> Positions

• assign the employee and the superiors to a position

N –>Setup –> Personnel –> Jobs

• define an approval group which allows him/her to approve PO’s up to the approval limit. Same for the superiors.

N –> Setup –> Personnel –> Position Hierarchy

• Make sure the document type (e.g. PO) allows ‘Owner can Approve’ (checkbox)
• Assign the approval groups to the correct positions
• Create a position hierarchy for every org according to your wishes
• Assign the hierarchies to the document type
• Run the concurrent request ‘Fill Employee Hierarchy’

and , finally the above can be understood in the data diagram as below.

To get the brief idea about some available standard available Oracle Application interfaces applicable within oracle purchasing modules and hopefully it should serve to familiarize individuals with limited knowledge of Oracle’s API functionality.

1. Open Requisition Interface

What you can do:
By this you can Automatically import requisitions from other oracle Application system or any other system using this interface. This allows you to integrate your oracle purchasing application with new or existing applications, such as material requirement planning, inventory management.etc.

What tables involved

• PO_REQUISITIONS_INTERFACE_ALL
• PO_REQ_DIST_INTERFACE_ALL

2. Requisition Reschedule

What you can do:

This is required when you are having Oracle Master Scheduling/MRP or a non-Oracle MRP system integrated with your oracle Purchasing, you may find that you need to reschedule requisitions as your
Planning requirements change. This API’S lets you reschedule requisition lines according to changes in your planned orders.

What tables involved

• PO_RESCHEDULE_INTERFACE

3. Purchasing Documents Open Interface

What you can do:

You can Automatically import and update standard purchase orders, price/sales catalog information, and responses to request for Quotations(RFQ’s) from suppliers through this interface. This interface uses the API’s to process document data in the oracle applications interface table to ensure that it is valid before importing it into oracle purchasing. After the data is validated, the program converts the information in the interface table into the appropriate document in purchasing.

What tables involved

• PO_HEADERS_INTERFACE
• PO_LINES_INTERFACE
• PO_DISTRIBUTIONS_INTERFACE

4. Receiving Open Interface

What you can do:

You can Automatically import receipt information from other oracle applications or other system using the receiving open interface. This interface lets you integrate your oracle purchasing applications with new or existing applications. E.g. you can load bar-coded and other receiving information from scanners.
More over the good things is that you can also bring Advance Shipment Notices (ASNs) sent from suppliers by this interface.

What tables involved

• RCV_HEADERS_INTERFACE
• RCV_TRANSACTIONS_INTERFACE

What you can’t done by this API’s

• Serial numbering
• Separate receive and deliver
• Corrections
• Returns
• Movement statistics
• Dynamic locators
• Receiving against Internal Orders
• Receiving against Inter-Organization transfers
• Receiving against Drop Ship Orders
• Receiving against RMAs

For more information for these three interface, you can refer these documenst.

• Part No. A95953-02

Lets take a quick look on different types of Purchase Orders , and some of the important tips before implementing within Oracle ebs-Suite of PO module.

• Standard Purchase Orders: You generally create standard purchase orders for one-time purchase of various items. You create standard purchase orders when you know the details of the goods or services you require, estimated costs, quantities, delivery schedules, and accounting distributions.
  • Suggested Use: Choose a standard purchase order when you require vendor commitment to specific items/services, quantities and delivery schedules, but a long-term agreement is not appropriate.
• Blanket Purchase Agreements: You create blanket purchase agreements when you know the detail of the goods or services you plan to buy from a specific supplier in a period, but you do not yet know the detail of your delivery schedules. 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).
  Much organization it is sometimes called as “standing order” or an “open order”.
  • Suggested Use: Choose a blanket agreement when you’ve negotiated volume discounts and want to create releases against these negotiated volumes, or when you commit to specific items, quantities or amounts.
• Blanket Releases: 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 affectivity dates).
• Contract Purchase Agreements/Order: 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.
  • Suggested Use : Negotiate pricing on your entire volume of business. Use a contract to manage terms and conditions for this type of negotiation; couple it with a catalog quotation to reference pricing on a per item basis when you create standard purchase order lines.
• Global Agreements: You may need to negotiate based on an enterprises’ total global purchase volume to enable centralizing the buying activity across a broad and sometimes diverse set of businesses. Using global agreements (a special type of blanket purchase agreement), buyers can negotiate enterprise-wide pricing, business by business, then execute and manage those agreements in one central shared environment. Enterprise organizations can then access the agreement to create purchase orders that leverage pre-negotiated prices and terms.
• Planned Purchase Orders: A planned purchase order is a long-term agreement committing to buy items or services from a single source. You must specify tentative delivery schedules and all details for goods or services that you want to buy, including charge account, quantities, and estimated cost.
  • Suggested Use: Choose a planned purchase order when you want to encumber the order before creating releases. Also use to provide vendor scheduling for capacity management while issuing releases to confirm order commitment.

Apart from these there are few more types may be defined as per there industry segment , but more or less they can be fit into any one of the above mentions type.

Procurement/purchasing is basically buying of goods and services, based on internal requirements, which will be used as input for the processing of the end product for a given company.
The input varies from simple stationery or MRO requirement (termed as indirect goods, as they are not directly involved in production processing) to raw materials (termed as direct, as they are used for production processing) and services.

How many types of Requisition in PO module we have?

There are two different kind of Requisition

• Internal Requisition
• Purchase requisition

What is an Internal Requisition?

A requisition from the Purchasing system that will directly result in the generation of a sales order in the Order Management system through the Order Import process in Order Management.

Why do we use internal requisition/internal sales order?
Internal Requisition/Internal Sales Order provide the mechanism for requesting and transferring material from one inventory organization to other inventory organization or expense location.

What is the location in Oracle Purchasing?
Oracle Purchasing uses locations to identify the final delivery location for both inventory and vendor sourced requisition. It is using the hr_locations table.

What is an Internal customer?
When using Internal Requisition/Internal Sales Orders, it is required to create an internal customer for each destination organization and a customer ship-to site for each deliver-to location within the destination organization. Define the same address for your customer ship-to-site as your deliver-to location.

Then what is Purchase Requisition?

The Purchase Requisition is the procedural method by which different departments of organization may request the purchase of goods and/or services, which require processing by Procurement Department.

What is life Cycle of Purchase Requisition?
If you are using i-procurement this consist of 4 distinct sub-processes like:

A Requisition is generated either manually or by system, which is ultimately turned into a purchase order by the buyer. Sometimes the buyer decides a request for quotation (RFQ) is required by other suppliers to determine the best price for the goods or services requested. Once the quote is back, that information is used to finalize the purchase order.

What is flow of Requisition?
A functional flow of Requisition cycle can be represented as

What are the important Tables for Requisition?
These are the main tables:

PO_Requisition_Headers_All : it stores information about requisition headers. Each row contains the requisition number and Addition relevant information. REQUISTION_HEADER_ID is primary key.

HR_Employees : it’s a view that contains information about employees. You must have a row for each requestor, requisition preparer, approver , buyer or receiver . The primary key is EMPLOYEE_ID.

PO_Requisition_Lines_All : This table stores the information about the requisition lines like quantity , item , deliver to location , requestor etc. Primary Key is REQUISTION_LINE_ID

MTL_System_Items_B : This is the definition table for items. This table holds the definitions for inventory items, and purchasing items. The primary key is INVENTORY_ITEM, ORGANIZATION_ID.

PO_REQ_Distributions_All : This table stores the information about the accounting distributions associated with each requisition line. Each requisition line must have at least one accounting distribution. Each row includes the accounting flex field id and requisition line quantity. The primary key is DISTRIBUTION_ID.

GL_CODE_Combinations: This table stores valid Accounting Flex Field segment value combinations for each accounting flex field structure within your GL application. GL_CODE_COMBINATIONS is populated by the system when a new accounting flex field combination is used, either through dynamic insertion or manually.

This can be best represented as per data model as:

Here are the drill down information for these two driving table:

1. PO_Requisition_Headers_All

• SEGMENT1 - Requisition Number
• AUTHORIZATION_STATUS - Lookup code and can have values
  • APPROVED Document has been Approved
  • CANCELLED Document has been Cancelled
  • IN PROCESS Document is still undergoing Approval
  • INCOMPLETE Document is not yet Complete
  • PRE-APPROVED Document is Approved but not yet Accepted
  • REJECTED Document as been Rejected
  • REQUIRES REAPPROVAL Requires Reapproval
  • RETURNED Document has been Returned
• REQUISITION_HEADER_ID Unique Requisition ID (PK)

2. PO_Requisition_Lines_ALL

• REQUISITION_LINE_ID Requisition line unique identifier
• REQUISITION_HEADER_ID Requisition header unique identifier
• LINE_NUM Line number
• QUANTITY Quantity of Line item
• LINE_LOCATION_ID Document shipment schedule unique identifier
• UNSPSC_CODE Standard UNSPSC CODE

How we map the Main screen for Requisition with database table.

In the Procure to pay cycle, we all know it start from requisition to payment, thus it is equally important to understand the relation between PO and Invoice, which of course is subject to Matching based on tolerances level set.

How many ways for matching
They are mainly 3 ways:

• 2-ways
• 3-ways
• 4-ways

How to explain

2-way matching

This verifies verifies that Purchase order and invoice information match within your tolerances as follows:
Invoice price <= Purchase order price
Quantity billed <= Quantity Ordered

3-way matching

This verifies that the receipt and invoice information match with the quantity tolerances defined:
Invoice price <= Purchase order price
Quantity billed <= Quantity Ordered
Quantity billed <= Quantity received

4-way matching

This verifies that acceptance documents and invoice information match within the quantity tolerances defined:
Invoice price <= Purchase order price
Quantity billed <= Quantity Ordered
Quantity billed <= Quantity received
Quantity billed <= Quantity accepted

How to relate between PO and invoice tables:

Here are the entity relationship diagram, explaining 2 way and 3 way matching condition.

In summary