Purchase Requisition and Various Requisitions
- It is a formal request intended to procure/buy something that is needed by the organization. It is created and approved by the department requiring the goods and services.
- A purchase requisition typically contains the description and quantity of the goods or services to be purchased, a required delivery date, account number and the amount of money that the purchasing department is authorized to spend for the goods or services. Often, the names of suggested supply sources are also included.
Basically, requisitions are of two types:
- Internal requisition and purchase requisition
- Internal Requisitions are created if the Items are to be obtained from one Inventory location to another location within the same organization. Here the source of the requisition would be INVENTORY. There is no approval process for internal requisition.
- Purchase Requisitions are created if the goods are obtained from external suppliers. Here the source of the requisition would be SUPPLIERS. The purchase requisitions are sent for approvals.
RFQ and the types of RFQ’s?
- A Request for Quotation (RFQ) is a formal request sent to the suppliers to find the pricing and other information for an item or items. Based on the information supplied, the supplier quotes a quotation against the RFQ form.
There are three types of quotations and RFQs that come with Purchasing by default:
- 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.
- 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.
- 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.
Purchase Order and the Different Types of Po’s Available
A Purchase order is a commercial document and first official order issued by the buyer to the supplier, indicating types, quantities, and agreed prices for products or services the supplier will provide to the buyer.
Basically, there are four types of Purchase Orders
Standard Purchase Order:
Used for One-time purchases for goods and services. Here you know the item, price, payment terms an delivery schedule.
Planned Purchase Order:
Created when you have long-term agreement with the supplier. You must specify the details of goods and services, payment terms and the tentative delivery schedule.
Blanket Purchase Agreement:
Created when the details of items and services, payment terms are known but not specific about the delivery schedule.
Contract Purchase Agreement:
Created when the terms and conditions of a purchase are known but specific goods and services are not.
P2P Process Flow
- Procure to pay (p2p) is a process of requesting, purchasing, receiving, paying for and accounting for goods and services. Procure to Pay Lifecycle is one of the important business Process in Oracle Applications. It’s the flow that gets the goods required to do business. It involves the transactional flow of data that is sent to a supplier as well as the data that surrounds the fulfillment of the actual order and payment for the product or service.
- Create a requisition>> create RFQ>> create a quotation from quote analysis>> generate a PO>>receipt of material>> create Invoice in payables>> transfer to GL
Receipt Routing
- Receipt Routing is of three types: Direct, Standard and Inspection
- In Direct once the goods arrive at the destination, we directly move them to a specific Sub-Inv
- In Standard once the goods are at the destination, we receive it at the receiving point first and then move them to the Sub-Inv.
- In Inspection once the goods are at the destination, we receive it at the receiving point and then we perform inspection and accordingly we either accept it or reject them.
- Purchase Order Receipts
- Internal Requisition Receipts
- Inventory Inter-Org Transfer Receipts
- Customer Return Receipts
- We can define sourcing rules that specify how to replenish items in an organization, such as purchased items in plants.
- Sourcing rules can also specify how to replenish all organizations, as when the entire enterprise gets a subassembly from a particular organization.
If there is a conflict between a sourcing rule and a bill of distribution, the sourcing rule takes precedence. - For instance, if you assign a bill of distribution to AUS that tells it to source a part from NYC, AUS can still define a sourcing rule to source the part from SAC. In this case, the local sourcing rule overrides the bill of distribution.
- Purchasing, Vision Operations >Supply Base >Sourcing Rules
Replenishment sources can be:
1) Make At – The replenished organization that manufacture the item
2) Buy From – An external supplier
3) Transfer From – An inter-organization Transfer
Overview of Defaulting Rules
- Defaulting rules enable you to create and update quotes easily.
- Based on the setup, appropriate fields in the quote are automatically filled in.
- Oracle Quoting has seeded defaulting rules that mirror the behavior of the application when defaulting was hard coded.
- However, you have the flexibility to disable the seeded rules and add your own.
- Defaulting rules populate values into fields in a quote (both header and line). We can define the rules and the sequence in which the defaulting must take place. We can also define the trigger and dependant fields.
- We can set up defaulting rules such that most of the mandatory and business rules-centric fields are taken care of. By doing so, you can focus on other aspects of the quote.
- Procurement organizations maintain lists, or repositories, that associate the items and services they buy with the companies that supply them.Oracle Supplier Scheduling maintains a central data repository known as the Approved Supplier List (ASL) that contains relevant details about each ship-from/ship-to/item combination.
- Only ASL items can be scheduled in Supplier Scheduling.
- The scheduling organizations must be designated as inventory, receiving/ship-to organizations. You must define all items used in Supplier Scheduling in the ASL for each organization or the global ASL record.
- For each supplier/item combination in the ASL, you can specify an effective Supply Agreement Blanket Purchase Order in the purchasing UOM. Only one Supply Agreement can be effective for the specified supplier site/item combination at a given time.
- All supplier scheduling quantities, including schedules, authorizations, and CUM’s, are tracked in the purchasing unit of measure as defined in the ASL.
- For each ASL entry, you can specify Supplier Scheduling defaults and controls, the release generation method, purchasing unit of measure, and assigned scheduler. You can also specify source Blanket Agreements, Supply Agreements, and Catalog Quotations for automatic reference during document creation.
- Support Supplier Certification programs by providing a single store of information regarding a supplier’s current status.
- Help design engineers achieve higher quality designs at a lower total cost through the re-use of preferred suppliers in new designs, which avoids supply base proliferation or unnecessary design dependence on difficult suppliers.
- Eliminate redundant sourcing efforts within departments and across organizations.
- Facilitate a more global approach to contract negotiation
- Provide immediate procurement visibility when a supplier is assigned an unfavorable status.
- Comply with external Quality System process requirements like ISO 9001/9002.
- Provide storage for general data attributes that are unique to the supplier/item combination.
- Maintain lists of supplier candidates by commodity or item for future consideration.
- With the Approved Supplier List (ASL) you can:
- Set approval (certification) status at the appropriate level for your business.
- Approve suppliers, distributors, and manufacturers.
- Define global or local ASL entries.
- Attach notes and external documents to each ASL entry.
- Link the primary supplier item number to your internal item number.
- Specify a Review By date, which indicates a proactive, planned review of your 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.
- Manage procurement activity by preventing purchase order approval or supplier schedule confirmation for certain supplier/item combinations.
- Determine ASL access and modification.
- Determine whether Sourcing Rules must be comprised of approved suppliers.
- Define reference information for the supplier/item combination.
- Use this form to define default shipping and/or receiving subinventory and/or locator for an item. Oracle Order Entry displays this default shipping information when you ship an item. Oracle Inventory displays the default receiving information when you receive an item.
- 1. Navigate to the Item Transaction Defaults window.
- 2. Select the Subinventories alternative region.
- 3. Enter an item to assign a default shipping and/or receiving subinventory.
- 4. Select the type of default:
- Shipping: Assign a default shipping subinventory to the item.
- Receiving: Assign a default receiving subinventory to the item.
- 5. Enter a subinventory to use as the default shipping and/or receiving subinventory for the item.
- If you restrict the item to specific subinventories using either the Subinventory Items window or the Item Subinventories window, you can only choose those subinventories in this field.
- 6. Save your work.
- 1. Select the Locators alternative region.
- 2. Enter an item to assign a default shipping and/or receiving locator for the subinventory associated with the item.
- 3. Enter a subinventory to use as the default shipping and/or receiving subinventory for the item.
- If you restrict the item to specific subinventories using either the Subinventory Items window or the Item Subinventories window, you can only choose those subinventories in this field.
- Attention: If you already defined a default shipping and/or receiving subinventory in the Subinventories alternative region, you should assign the same subinventory to the item in this field.
- 4. Select the type of default:
- Shipping: Assign a default shipping locator to the item for this subinventory.
- Receiving: Assign a default receiving locator to the item for this subinventory.
- 5. Enter a locator to use as the default shipping and/or receiving locator for the item in this subinventory.
- 6. Save your work.