Purchasing Overview

Purchasing refers to a business or Organization acquiring goods or services to accomplish the goals of the Organization. The objectives of Purchasing are:

1. Maintain the quality of goods

2. Maintain continuity of supply

3. Maintain the flow of inputs and outputs

4. Avoide duplication and waste

3. Strengthen the competitive position of an Organization.

The Purchasing Process is as follows:

1. The employees raise Requisitions, requesting for required goods or material

2. Concerned authorities Request for Quotations from suppliers

3. Suppliers come with Quotations

4. Analysing the quotations from suppliers and select best quotation

5. Create Purchase Orders, mentioning all the details related to the goods or material and send to the supplier

6. Receiving the goods from suppliers

7. Storage of goods

Oracle Purchasing automates purchasing to make buyers more productive, improves management of your supply base, and adapts to virtually any procurement process. The main functionalities provided by Oracle Purchasing are as follows:

1. Requisitions: Requisition refers to Request for the material. This is the first step in the purchasing process. Requesitions are of two types:

     - Internal :  Internal Requisitions are to be created when you want to source the items internally.  Internal requisitions provide the mechanism for requesting and transferring material from inventory to other inventory or expense locations.This will be converted as Internal Sales Order.

     - Purchase: Purchase requisitions are used when you want to by the items from  a supplier. This will be converted as Purchase Order.


2. Document Approval Process:


Oracle Purchasing uses Workflows to handle requisition and Purchase Order approvals, automatic creation of Purchase Orders and releases, Purchase order changes, notifications and receipt confirmation. The different workflows that Purchasing uses are:


- PO Requisition Approval workflow: This work flow is used for approving requisitions.


- PO Approval workflow: This workflow is used for approving purchase orders.


- Change Order workflow: This workflow is used 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.


- PO Create Documents workflow: This workflow is used for automatically creating purchase orders and releases.


- PO Account Generator Workflow:  This workflow automatically generates accrual, budget, charge, and variance accounts on purchase orders and releases.


- PO Requisition Account Generator workflow: This workflow automatically generates accrual, budget, charge, and variance accounts on requisitions.


3. RFQ's:
A request for quotation (RFQ) is sent to a supplier to request pricing and other information for an item or items.There are three types of RFQ's that come with Purchasing by default: They are Standard, Bid and Catalog.  


 -Standard RFQ:  Standard RFQ is 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, An organization can use Standard RFQ for a special type of equipment, which they need only once or which they don't order very often. A standard quotation includes price breaks at different levels of quantity.


-Bid:  Bid RFQ is Used for a specific, fixed quantity, location, and date. For example, an organization can use a Bid RFQ to order expensive or very large equipment with specific quantity, which has never ordered in the past and may incurs special costs like transportation. Price breaks can not be specified for a Bid RFQ


-Catalog:  Catalog is Used for high-volume items or items for which your supplier sends you information regularly. For example, an organization can use Catalog quotation for office supplies.  Price breaks can be specified for a Catalog quotation at different levels of quantity ordered.


4. Quotations:
A quotation is the supplier's response to the RFQ. Quotations are also 3 types as RFQ's. Standard, Bid and Catalog. Standard, Bid, and Catalog quotations are same as Standard, Bid, and Catalog RFQ's.


5. Quotation Analysis:
Quotation Analysis is used to review and approve general or specific quotation information for an item or a purchasing category. After the Quotation analysis, the best quotation will be selected based on different parameters like Price, quality, delivery time etc.


6. Purchase Orders:
A purchase order (PO) is a commercial document issued by a buyer to a seller, indicating types, quantity, and agreed prices for products or services the seller will provide to the buyer.


Purchase Orders are issued when we request delivery of Goods or Services for specific dates or locations .
Purchasing provides the following purchase order types: Standard Purchase Order, Planned Purchase Order, Blanket Purchase Agreement, and Contract Purchase Agreement.


 - Standard Purchase Order:  Standard purchase orders are generally created for one-time purchase of items. To create standard purchase orders, users should know the details of the goods or services you require, estimated costs, quantities, delivery schedules, and accounting distributions. If you use encumbrance accounting, the purchase order may be encumbered since the required information is known.


- 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.


- Blanket Purchase Agreements: Blanket purchase agreements are to be created 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). You can encumber funds for a blanket purchase agreement.


- 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.

<><><><><><>

	Standard PO	Planned PO	Blanket Purchase Agreement	Contract Purchase Agreement
Business Purpose	For one time purchase items eg. Capital equip , Generators etc	For items whose supply date is tentative. The PO is released when material is required by us / sent by supplier against the release.	For Items needed in huge quantity at a discounted price over a period ( eg. components for an Automobile manf co) . The BPA is released when material is required and the supplier sends material against the Release	Purchasing diverse items from a single supplier. A Standard PO is created against a CPA
Goods or Services known	Yes	Yes	Yes	No
Price known	Yes	Yes	Yes	No
Quantity known	Yes	Yes	No	No
Delivery Schedule known	Yes	Tentative	No	No
Terms and Conditions known	Yes	Yes	Yes	Yes

7. AutoCreate:
Purchasing provides automatic creation capabilities for documents. Buyers can quickly create standard purchase orders, planned purchase orders, blanket releases, RFQs, and Oracle Sourcing negotiations from any available standard (not internal) purchase requisition lines.


8. PO Communication:
Purchasing allows you to communicate with concerned people regarding the purchase orders by using notifications, reports, alerts and FYI notifications.


Oracle R12 supports FYI(For Your Information) notifications. So, FYI notifications can be enabled for the viewers to avoid reports and alerts.
When someone gets FYI notification, their approval response is not required.


This feature is available only at the Rule level. So to have FYI notifications and regular response required Approval Notifications send to other approvers, multiple AME Rules have to be created.


9. Change Orders:
Purchasing allows you to modify the existing purchase orders or requistions. For Internal Requisition Oracle supports changes to the following attributes:
1. Quantity
2. Need By Date
If preparer updates any of these values, the changes will be reflected in Internal Sales Order.


10. Receiving:
Receiving allows you to receive the goods or material from suppliers. Receipts are of four types:


- Direct Receipt:
Direct receipt limits receipt of items directly to the final destination; also known as dock to stock receipt. The final destination includes the requester, or the inventory.


In Direct Receipt Goods are received and delivered in one transaction


 - Standard Receipt:
A receipt routing in which shipments are received into a receiving location and then delivered to an interim or final destination in a separate transaction. Standard receipts can be inspected or transferred before delivery.


In Standard Receipt Goods must be received and delivered in separate transactions.


- Inspection Required:
A receipt routing in which shipments are received into a receiving location and then the items should go for inspection before accepting or rejecting the items.




 - Express Receipt:
The express function is a quick method of entering receipts and receiving transactions.


Returns:
Purchasing allows you to perform returns to suppliers or to customers in the Receiving Returns window.


11. Releases:
Purchasing allows you to enter, edit, and approve releases against blanket purchase agreements or planned purchase orders.