Overview
of Purchasing in Oracle Apps
Overview
of Purchasing in Oracle Apps
Create
requisition to procure goods and service with supplier information, delivery
instructions, multiple accounting distributions, and notes to buyers,
approvers, and receivers. A request for quotation (RFQ) is sent to a supplier
to request pricing and other information for an item. A quotation is the
supplier’s response to that RFQ. Identify requisitions that require supplier
quotations and automatically create a RFQ Or create manually and send it thru’
Fax or iSupplier portal. Record supplier quotations from a catalog, telephone
conversation, or response from your RFQ. You can also receive quotations
electronically and import as Quotations (catalog). Review, analyze, evaluate
and approve supplier quotations. Create standard purchase order, BPA and blanket
releases. Inform your suppliers of your shipment schedule requirements. Record
supplier acceptances of your purchase order’s terms and conditions. Provide a
quantity and price for each item you are ordering. Alternatively, you should
also be able to create your purchase order simply by providing an amount if you
are ordering a service that you cannot break down by price and quantity. Enter
goods and service receipt information against the PO using routing controls
viz: Direct delivery, standard receipt or standard receipt with inspection.
Transfer and deliver goods using the Receiving Transactions window. If you want
to perform an inspection transaction, you can open the Inspections window to
specify accepted and rejected quantities.
This
cycle involves following steps from creating a requisition to transfer the
details to GL.
1. Create Requisition
Approve requisition
2. Create Purchase Order
Approve Purchase Order
3. Create Receipt after receiving the goods
4. Create an Invoice in AP
5. Pay the invoice
6. Transfer, Import and Post Journal to GL
Basic Components of Procurement
Requisition
Requisition
is nothing but a formal request to buy something (like Inventory material,
office supplies etc) needed for the enterprise. Only an employee can create
one.
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.
Purchasing provides you with the features you need to satisfy the
following basic requisition needs. You should be able to:
· Create, edit, and review requisition information on-line. You
should also be able to enter suggested supplier information, delivery
instructions, multiple accounting distributions, and notes to buyers,
approvers, and receivers.
· Review the current status and action history of your requisitions.
You should always know who approves requisitions and whether they are in the
approval, purchasing, receiving, or delivery stage.
· Route requisitions according to your approval structure. You
should also be able to set authorization limits by amount, charge account, item
category, and location.
· Review and approve requisitions that need your approval. You
should also be able to see the full requisition detail and review the action
history before you approve a requisition.
· Print requisitions (with status Approved, Cancelled, Rejected, In
Process, Pre-Approved, and Returned) for off-line review and approval. You
should always be able to track the status of requisitions through the approval
process.
· Import requisitions from other systems such as material or
distributions requirement planning applications
· Perform on-line funds checking before creating requisitions. You
should always know how your planned expenses compare to your budget.
· Automatically source requisitions from outstanding blanket
purchase agreements or quotations you have received from suppliers
· Create requisitions quickly and easily for commonly purchased
items
· Provide attachments as notes on requisition headers and lines
· Assign requisition lines to buyers and review buyer assignments
for requisition lines
· Forward all requisitions awaiting approval from one approver to an
alternate approver. Within your security and approval constraints, you should
be able to reroute requisitions from one approver to another whenever you want.
· Record suggested foreign currency information for each requisition
line
Requisition Types:
1. Purchasing Requisition:
Purchase requisitions are used for requesting material from suppliers.
2. Internal Requisition:
Internal requisitions provide the mechanism for requesting and transferring
material from one inventory to other inventory
RFQ
A
request for quotation (RFQ) is sent to a supplier to request pricing and other
information for an item. A quotation is the supplier’s response to that RFQ.
You send an RFQ to a supplier by fax, making a phone call, or using Oracle
iSupplier Portal. 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 for 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.
Types of Quotations
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.
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.
Purchasing provides you the features you need to satisfy the
following purchasing needs. You should be able to:
· Review all of your purchases with your suppliers to negotiate
better discounts
· Create purchase orders simply by entering a supplier and item
details
· Create standard purchase orders and blanket releases from both
on-line and paper requisitions
· Create accurate and detailed accounting information so that you
charge purchases to the appropriate departments
· Check your funds availability while creating purchase orders.
· Review the status and history of your purchase orders at any time
for all the information you need
· Print purchase orders flexibly by using a number of print options
· Inform your suppliers of your shipment schedule requirements
· Record supplier acceptances of your purchase orders. You always
know whether your suppliers have received and accepted your purchase order
terms and conditions
· Create your purchase orders by providing a quantity and price for
each item you are ordering. Alternatively, you should also be able to create
your purchase order simply by providing an amount if you are ordering a service
that you cannot break down by price and quantity
Purchase Order Types
There are mainly 4 types of Purchase Orders
· Standard Purchase Order
· Blanket Purchase Agreements
· Contract Purchase Agreements
· Planned Purchase Orders
Standard Purchase Order
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.
Blanket Purchase Agreements (BPA)
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.
You can issue a Blanket release against a BPA to place the actual
order (as long as the release is within the blanket agreement effectively
dates).
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.
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.
You
can issue scheduled releases against a planned purchase order to place the
actual orders. If you use encumbrance accounting, you can use the planned
purchase order to reserve funds for long term agreements.
