Oracle R12 Apps SCM Functional Interview Questions & Answers

Purchasing Module
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1. What is 2-way, 3-way, 4-way matching?
2-way matching:
2-way matching verifies that Purchase order and invoice quantities must match
within your tolerances as follows:
Quantity billed <= Quantity Ordered
Invoice price <= Purchase order price
(<= sign is used because of tolerances)
Often used for services where no receiver is generated.
3-way matching:
3-way matching verifies that the receipt and invoice information match with the
quantity tolerances defined:
Quantity billed <= Quantity received
4-way matching:
4-way matching verifies that acceptance documents and invoice information match
within the quantity tolerances defined:
Quantity billed <= Quantity accepted.
(Acceptance is done at the time of Inspecting goods).
2. Difference between Job hierarchy and position hierarchy? What are the steps
involved in setting up Position Hierarchy?
Job hierarchy is used when there is a single approval hierarchy system in the
organization compared to Position hierarchy which is used if for the same job, multiple
positional approvals are required i.e. Junior buyers requisition needs to be approved
by senior buyer and senior buyers requisition is sent to Supply Chain manager and
then to Finance manager for final approval. In Position hierarchy, approval might
happen between different positions for the same Job.
Setups required:

Use Approval hierarchy must be checked in Finance Options

Jobs must be defined

Position must be defined and mapped to jobs

Position hierarchy must be setup

Position hierarchy must be mapped to Document type

Define and assign Approval groups

Assign employees

Run Fill Employee hierarchy concurrent program

3. What is the difference between bill of distribution and sourcing rule?

Sourcing rule is used to determine the source of particular item i.e. Suppliers or source
organization in an organization. Bill of distribution is used to determine how the item
is distributed in an organization i.e. warehouses to which item are to be distributed.
4. A buyer is authorized to approve PO worth 5000 but though the PO is below 5000,
buyer is not able to approve it? Which setup is missing?

There might be restriction on the item, category or account combination that

would prevent a particular user not approve a PO.

Check if approval workflow is running

If any changes have been done to position or Job, has the Fill employee hierarchy

program been run to update these positions

If Employee supervisor hierarchy is set, is the supervisor a valid and active

employee.

Are multiple users mapped to same employee?

5. If ranks and allocations are provided in Sourcing Rules to Suppliers or Inventory

organizations, what is the use of these ranks and allocations and where is it used?
Ranks and allocations are used by MRP or ASCP modules to create supply based on
the ranks provided. If a requisition needs to be created for a demand of an item, then
system checks the sourcing rule and creates a requisition to the Rank 1 supplier and
based on the allocation percentage specified.

For example, if demand for an item X, is to be satisfied by creating a requisition, then

system looks at the sourcing rule, if two suppliers are given Rank 1 and allocation as
70% and 30% then system creates two requisition lines, one for 70% of supply quantity
from supplier 1 and other for 30% of supply quantity from supplier 2.
Total of allocation for each rank must sum up to 100 for the sourcing rule to be
planning active.
6. Client requires every Purchase order to have paper based Requisition number
entered mandatory in Create Purchase order screen by users [Client doesnt want to
create Requisition in APPS and use Auto-create functionality in this scenario]. How
to handle this requirement?
Enable a DFF at PO line level and make the DFF mandatory to be entered by user for
each line.
7. What is the difference between Blanket Purchase Agreement and Contract Purchase
Agreement?
Blanket purchase agreements carry 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.
Contract purchase agreements are created 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
8. Client requires control over procurement for each department. Is it possible in
Oracle EBS to handle such a requirement?
Yes, Using Encumbrance functionality, each department can be allocated a specific
amount and purchasing would honor this and ensure system doesnt approve PO more
than the budgetary amount.
9. What are the types of receipts and their functions in Purchasing?

There are no distinct types of receipts as we find in PO documents (Requisition,

Quotation, Purchase order etc). Receipts differ mainly by the method of recording
the receiving transactions.
1) Unordered receiving
2) Blind receiving
3) Express receiving
4) Substitute receiving
10. For an OSP Sub-assembly, when you move transaction to the 'Queue' of an OSP
Operation, Requisition Import is fired which creates an Approved Requisition and an
Unapproved PO. What are the setups that govern creation of PO?
Sourcing Rule needs to be defined for the item. The sourcing rule needs to be mapped
to item and organization under an assignment set.
11. When does a Purchase order or requisition goes into Pre-Approved status?
A person with the final authority to approve the document approves it, but then
forwards it to someone else for additional approval, thus changing its status to Pre
Approved.
Your organization uses encumbrance (reserves funds for documents), and the
document is authorized for approval but funds have not yet been reserved for it. Even
if someone with sufficient approval authority approves the document, its status may
still be PreApproved if funds were not able to be reserved at the time of approval.
Once funds are reserved for the approved document, the document changes its status
to Approved.
12. If the preparer of purchase requisition is not authorized to Approve that requisition
then what setup should be performed in the system to achieve this?
In document type, set Owner can approve flag to No
13. How do I ensure if Purchase order is cancelled then corresponding requisition is also
cancelled
In Purchasing Option, Set Cancel requisition to Optionally or Always

14. What is the functionality I am achieving by setting Receipt close % as 100 %?

Receipt close % ensures that PO line ordered quantity is closed up to that specified
percentage. If Receipt close point is set as 60% and if Order quantity is 100 then if PO
receipt is made for 40 quantities then PO line would be moved to closed status
automatically,
15. Client wants each requisition auto created in the system to be grouped by Buyer,
how to achieve this in EBS?
In Purchasing option, Set requisition group by parameter to Buyer
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