Oracle Purchasing Terminology

Oracle Purchasing Terminology

Terms used in the conventional purchasing system and as referred in Oracle Purchasing may be different. A brief explanation of the ‘Oracle Purchasing’ existing terminology is provided the following paragraphs. These terms are extensively used in documenting the ‘Purchasing - To Be’ flows and it is recommended that the various users of this system get acquainted with the same.

Requestor: Any Employee who requires specific items to meet his operational needs. Requestor may or may not have the system access to enter the on-line requisitions. Requestor with no computer access will give their requisitions manually on pre-printed requisition form to the requisition ‘Preparer’ within the concerned department.

Preparer: Employee in a department with the responsibility of entering Purchase Requisitions in the system.

Approver: Employee with the responsibility and authority of approving the requisition and / or the Quotation Analysis Document and / or the Purchase Orders.

Buyer: Employee in the Purchase Department with the responsibility of entering the Requests for Quotation, the Quotations received from the Supplier and the Purchase Orders in the new system.

Request For Quotation (RFQ): Synonym for ‘Inquiry’. RFQs are sent to the vendors, requesting them for their quotations for the items / services required to be purchased.

Quotation: Quotations are the ‘Vendor Offers’ for the required items / services.

Quotation Analysis: It is a ‘Comparative Statement of Quotations’.

Standard Purchase Order: Standard Purchase Orders are created for purchase of various items / services where details such as the quantity to be purchased and the negotiated costs.

Blanket Purchase Agreement: Blanket purchase agreements are signed with the vendor for the supply of goods / services over a period. Such agreements can be used when details of the goods / services you plan to buy from a specific supplier in a period are known, but you do not yet know the details of your delivery schedules. They can also be used to specify negotiated prices for your items before actually buying them.

Blanket Release: You can issue a Blanket Release against a Blanket Purchase Agreement to place the actual order with the vendor. The Releases should be within the Blanket Agreement effectively dates.

Planned Purchase Order: It is a long term agreement committing to buy items / services from a single source. The tentative delivery schedule is given to the vendor along with other details like quantities and estimated costs.

Schedule Release: This document is issued to the vendor against a Planned Purchase Order to place the actual order. This document will confirm the specific quantity and delivery date to the vendor.

Contract Purchase Agreements: Contract Purchase Agreements may be entered into with suppliers to agree on specific terms and conditions without indicating the goods or services that will actually be purchased. Standard Purchase Orders can be issued at a later date referencing such Contracts.

Requisitions: Requisitions generated by various departments of your organization. They basically say that ‘I WANT THIS ITEM’ mentioning the item quantity and required date

Receiving Goods: Suppliers ship the goods, which are received in your organization

Payments: After clearance from the receiving department about the receipt of goods, payments are made to the suppliers.

Close the PO: After the items are received, payments made you can close the PO.

Purchasing Requirements

·         Item

·         Quantity

·         Ship to Address

·         Bill to Address

·         Delivery Schedules

·         Terms and Conditions

·         PO Numbering

·         Approval Authority

·         Supplier

·         Accounts

What are the types of Purchase Orders and Key points in Purchasing?

Purchase Order Types Summary

	Standard Purchase Order	Planned Purchase Order	Blanket Purchase Agreement	Contract Purchase Agreement
Terms and Conditions Known	Yes	Yes	Yes	Yes
Goods or Services Known	Yes	Yes	Yes	No
Pricing Known	Yes	Yes	Maybe	No
Quantity Known	Yes	Yes	No	No
Account Distributions Known	Yes	Yes	No	No
Delivery Schedule Known	Yes	Maybe	No	No
Can Be Encumbered	Yes	Yes	No	No
Can Encumber Releases	N/A	Yes	Yes	N/A

What are the types of matching options in P2P Cycle?

Purchasing and Payables enable you to match invoices to purchase order shipments or purchase order distribution lines. There are following three ways to match Purchase Order and Invoices

2-way matching: This verifies that Purchase order and invoice information match within your tolerances as follows and check following:

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 and check following:

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 and check following:

Invoice price <= Purchase order price

Quantity billed <= Quantity Ordered

Quantity billed <= Quantity received

Quantity billed <= Quantity accepted

What are the routing methods in Receiving?

-          Direct

-          Standard

-          Inspection Required

What are the list of fields changes cause Purchase Order Document Revision Increment?

The following tables describe the additions and changes that cause Purchasing to increment document revision numbers in each of the document components. These are the ONLY fields which will cause the revision to increment:

Header Information	Standard	Planned	Blanket	Contract	Release
Buyer	X	X	X	X	X
Contact	X	X	X	X
Confirm	X	X	X	X
Ship-To	X	X	X	X
Bill-To	X	X	X	X
Payment Terms	X	X	X	X
Freight Carrier / Ship Via	X	X	X	X
FOB	X	X	X	X
Freight Terms	X	X	X	X
Brief Note to Supplier	X	X	X	X
Acceptance Required	X	X	X	X	X
Acceptance Due Date	X	X	X	X	X
Amount Limit		X	X	X
Effective Date		X	X	X
Expiration Date		X	X	X
Cancel Flag	X	X	X	X
Amount Agreed			X	X
Release Number					X
Release Date					X
Confirming Order	X	X	X	X	X
Oracle Procurement Contracts: Contract Terms	X		X	X

Line Information	Standard	Planned	Blanket	Contract	Release
Unit Price	X	X	X
Line Number	X	X	X
Item	X	X	X
Item Revision	X	X	X
Item Description	X	X	X
Payment Terms	X	X	X
Quantity	X	X	X
Unit of Measure	X	X	X
Source Quotation Header	X	X	X
Source Quotation Line	X	X	X
Hazard Class	X	X	X
UN Number	X	X	X
Contract Number	X	X	X
Supplier Item Number	X	X	X
Brief Note to Supplier	X	X	X
Price Type	X	X	X
Quantity Agreed			X
Amount Agreed			X
Closed Code	X	X	X	X	X
Cancel Flag	X	X	X	X	X
Ship-To Location			X
Break Price			X
Price Break Number	X	X	X

Shipment Information	Standard	Planned	Blanket	Contract	Release
Shipment Number	X	X			X
Ship-To	X	X			X
Quantity	X	X			X
Promise Date	X	X			X
Need-By Date	X	X			X
Last Acceptance Date	X	X			X
Taxable	X	X			X
Shipment Price					X
Cancel Flag	X	X			X

Distribution Information	Standard	Planned	Blanket	Contract	Release
Quantity	X	X			X
Requestor	X	X			X
Distribution Number	X	X			X

What is the major difference between drop shipment and back to back order?

-          In B2B the source will be internal but the item would be procured after the order is created or after the demand is made.

-          In Drop Ship the source will be external

-          In Drop Ship orders, material is directly shipped to the customer from the supplier. Thus, inventory is not affected. In this case, only logical receiving is done. But in the case of Back-to-Back orders, material is taken from inventory.

-          Drop Ship orders may have many Purchase Orders connected to them. In Back-to-Back orders one PO is tied to one Sales Order

Types of approval hierarchies in Purchasing?

Position Approval hierarchy - Position Hierarchies are hierarchies that have a position relationship. By position, we mean position that are attached to employees. Purchasing utilizes positions as a roadmap to determine how and where documents will be routed once the approval process has been initiated. It is first necessary to have created all positions that are going to be used in the system. Once all positions have been created, it is necessary to build the position hierarchy. Each position has approval limits, so when a purchase order exceeds the limits of the position, the purchase order is forwarded onto the next position in the Hierarchy.

Employee/Supervisor approval hierarchy - Employee/Supervisor approval hierarchy uses the employee-supervisor relationships. To implement this form of approval routing, you need only to define jobs. The job will then serve as the tie to the Approval group, and based on the approval limits from the Approval Group, the Document will either be Approved or Forwarded to the Employees’ Supervisor. If no Supervisor is able to be located and the job assigned to the employee does not have Approval Authority, then the Approving employee must enter a Forward-to person, or the Document will be returned to an Incomplete status and a notification will be sent to the Approving employee, stating - 'No Approver Found'

Advanced Approval Support for Requisitions
Feature offered in Release 12 which closely integrates with Oracle Approvals Management module.